Property Valuation
In Hawaii, what is 'absorption rate' in real estate market analysis?
AA. The rate at which soil absorbs rainfall
BB. The rate at which available properties in a market are sold over a specific time period✓ Correct
CC. The rate at which a mortgage is paid down
DD. The percentage of gross income absorbed by housing costs
Explanation
Absorption rate measures how quickly available homes sell in a given market. It helps determine whether it's a buyer's or seller's market: months of supply = total listings / monthly sales.
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Key Terms to Know
Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
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