Property Valuation
A Colorado appraiser using the 'Gross Rent Multiplier' (GRM) method determines value by:
AA. Dividing NOI by the cap rate
BB. Multiplying the property's monthly gross rent by the GRM derived from comparable sales✓ Correct
CC. Adding replacement cost to land value
DD. Subtracting depreciation from reproduction cost
Explanation
The GRM method: GRM = Sale Price ÷ Monthly Gross Rent (from comparables). Value = Subject's Monthly Gross Rent × GRM. This is a simplified income approach used for smaller residential income properties. It is less precise than the capitalization approach because it does not account for expenses.
Related Colorado Property Valuation Questions
- A Colorado appraiser's 'reconciliation' note states that 'greatest weight was given to the sales comparison approach.' This is because:
- In Colorado, a 'before and after' valuation method is used in which appraisal context?
- A Colorado appraiser uses three comparable sales to value a home. Comp 1 requires a $5,000 upward adjustment for a bedroom. Comp 2 requires a $3,000 downward adjustment for a garage. Comp 3 requires no adjustments and sold for $385,000. Which comp is the most reliable indicator of value?
- The 'land residual technique' in Colorado appraisal is used to:
- When an appraiser applies the 'matched pairs' analysis in Colorado, they are:
- The principle of 'highest and best use' in Colorado appraisal means:
- The 'effective age' of a building in Colorado appraisal refers to:
- The gross rent multiplier (GRM) for a small residential rental property in Colorado is calculated as:
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