Property Valuation
In a NJ appraisal, the 'income multiplier' approach is most useful for:
AValuing single-family owner-occupied homes
BQuickly estimating value for small income properties using the ratio of sales price to gross income✓ Correct
CEstablishing insurance replacement costs
DDetermining property tax assessments
Explanation
Gross income multipliers (GIM or GRM) are most useful for quick value estimates of small income properties where similar properties have sold and their sale prices and income figures are available. The GIM = Sale Price ÷ Gross Annual Income and is used to value 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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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