Property Valuation
Vermont's 'absorption rate' in real estate market analysis measures:
AHow quickly properties retain water during floods
BThe rate at which available properties are sold in a given market during a specified time period✓ Correct
CHow quickly property taxes are collected
DThe rate of mortgage default in a market
Explanation
Absorption rate measures how quickly available homes or units are sold in a market. It is calculated by dividing the number of sales in a period by the available inventory.
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Key Terms to Know
Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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