Property Valuation
In Tennessee, the 'overall rate' (OAR) used in the income approach is also known as the:
ADiscount rate
BCapitalization rate (cap rate)✓ Correct
CGross rent multiplier
DInternal rate of return
Explanation
The overall capitalization rate (OAR or cap rate) converts net operating income into value. It reflects the market's combined return on and return of investment for a given property type in a given market.
Related Tennessee Property Valuation Questions
- The income approach uses a direct capitalization formula: V = I / R. In this formula, 'R' represents:
- When a comparable sale was distressed (sold in foreclosure at below-market price), an appraiser should:
- When using the gross rent multiplier (GRM), if a property rents for $1,500/month and comparable properties sell at a GRM of 120, what is the estimated value?
- An appraiser using the sales comparison approach finds a comparable sale with a garage that the subject property lacks. The appraiser would make a:
- The reconciliation process in an appraisal involves:
- In Tennessee, a certified general appraiser is qualified to appraise:
- Absorption rate in real estate market analysis measures:
- The principle of substitution states that:
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