Property Valuation
The income multiplier method uses which of the following to estimate value?
AVacancy rate × monthly rent
BSale price divided by monthly or annual rent to derive a multiplier applied to the subject's rent✓ Correct
CNOI divided by cap rate
DCost of improvements minus depreciation
Explanation
The income multiplier method (GRM or GIM) divides the sale prices of comparable properties by their rental income to derive a multiplier, which is then applied to the subject property's income to estimate value.
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Key Terms to Know
Fair Housing Act
Federal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, disability, and familial status.
SteeringAn illegal practice where a real estate agent directs buyers toward or away from certain neighborhoods based on the buyer's race, religion, national origin, or other protected characteristics.
BlockbustingAn illegal practice of inducing homeowners to sell by claiming that the entry of minority groups will lower property values.
RedliningAn illegal practice where lenders or insurers deny services or charge higher rates in certain neighborhoods based on the racial or ethnic composition of those areas.
State-Specific Concepts
GREC Regulation
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