Property Valuation
Which approach to value is most commonly used to appraise single-family residences?
ACost approach
BIncome approach
CSales comparison approach✓ Correct
DGross rent multiplier method
Explanation
The sales comparison approach is the primary method for appraising single-family residences, comparing the subject to recently sold comparable properties.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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