Property Valuation
A Connecticut property's 'months of inventory' is calculated by dividing:
AThe number of sales by the list price
BThe total active listings by the average monthly sales rate✓ Correct
CThe number of pending sales by the total listings
DThe average days on market by the number of active listings
Explanation
Months of inventory = Total active listings ÷ Average monthly sales. A lower number of months indicates a sellers' market (high demand); a higher number indicates a buyers' market (excess supply).
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Key Terms to Know
Capitalization Rate (Cap Rate)
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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