Property Valuation
An Indiana appraiser using the income approach on a single-tenant office building would MOST rely on which type of lease data?
AResidential lease comparables
BMarket lease rates for comparable commercial space in the area✓ Correct
CThe seller's original purchase price
DThe tenant's annual gross sales
Explanation
To apply the income approach to commercial property, an appraiser uses market lease data for comparable commercial space — current market rents, vacancy rates, and expense ratios for similar properties.
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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.
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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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