Property Valuation
In the income approach, the 'direct capitalization' method converts income to value by:
AA. Multiplying NOI by the economic life of the property
BB. Dividing NOI by the capitalization rate✓ Correct
CC. Adding NOI and the reversion value
DD. Multiplying rent by the gross rent multiplier
Explanation
Direct capitalization = NOI ÷ Capitalization Rate = Value. This one-step method converts a single year's stabilized income estimate into a value indication using a market-derived cap rate.
Related Georgia Property Valuation Questions
- The reproduction cost in the cost approach refers to:
- An appraiser who assigns a value above the contracted purchase price to justify a pre-determined value is committing:
- External obsolescence (also called economic or locational obsolescence) is:
- An appraisal that determines 'market value' estimates the price that:
- In the cost approach, 'physical depreciation' is divided into which categories?
- When multiple appraisal approaches give different value indications, the final value conclusion involves:
- USPAP requires appraisers to retain their workfiles for a minimum of:
- When performing a comparable market analysis (CMA), a Georgia agent should select comparables that:
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