Property Valuation
The 'income multiplier' approach is limited in accuracy because it:
AIs too complicated for residential appraisers
BIgnores operating expenses, vacancy rates, and financing costs — providing only a rough value estimate✓ Correct
CCannot be applied to multi-family properties
DIs prohibited by USPAP
Explanation
Income multipliers (GRM, GIM) provide a quick, rough estimate of value but ignore operating expenses, vacancy, and financing — making them imprecise tools for detailed investment analysis compared to full income capitalization.
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