Property Valuation
When using the income approach to value a rental property in Ogden, Utah, the appraiser needs to determine the market rent by:
AUsing the current lease rate without adjustment
BAnalyzing rents for comparable rental properties in the market✓ Correct
CMultiplying the purchase price by a standard rent ratio
DUsing the owner's desired rent
Explanation
Market rent is determined by analyzing comparable rental properties in the same market. The appraiser uses comparable rentals to establish what the subject property would likely rent for—not the contract rent if the current lease is above or below market.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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