Property Valuation
A Connecticut appraiser uses the 'income multiplier' method. The property's potential gross income is $96,000. Similar properties trade at a potential gross income multiplier (PGIM) of 9.5. The indicated value is:
A$912,000✓ Correct
B$1,024,000
C$886,000
D$960,000
Explanation
Value = PGIM × PGI = 9.5 × $96,000 = $912,000.
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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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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