Ch 10 Quiz Flashcards
How is a GRM derived?
dividing sale price by gross monthly unfurnished market rent
“A measure of central tendency consisting of the numerical value or categorical characteristic that occurs most frequently in a sample or population” is the definition of
mode
“A measure of central tendency identified as the middle value in an ordered array of numerical values …” is the definition of
median
“The region or area over which something is found, is distributed, or occurs” is the definition of
range
“The sum of values for a variable in a sample or population divided by the number of items in the sample or population” is the definition of
mean
A gross income multiplier is most likely to be used for _______ property units.
more than four
A house is rented for $875 per month and it sells for $120,000. What is the indicated GRM?
137.1
A property sells for $95,750. At the time of sale it is rented for $975. What is the GRM?
98.2
A property sold for $74,000 and it was rented for $675 at the time of sale. What is the indicated GRM?
109.6
A set of numbers that has two modes is referred to as a:
bi-modal distribution
A single-unit property has a monthly unfurnished market rent of $1,050. It sold for $98,000. What is the indicated GRM?
93.3
An apartment building had 12 units rented for $1,400 per month and 20 units rented for $1,600 per month. It sold for $3,000,000. What was the GIM?
5.1
An appraiser extracts a set of market rental amounts for houses like the subject. They are $850, $875, $775, $950, $925, and $900. What is the mean of the market rents?
879.17
An appraiser has analyzed a set of 12 GRMs extracted from the market. In this set, the number 98 appears three times, and no other number appears more than once. The number 98 is therefore the _______ of this data set.
mode
An expense ratio is the ratio of
expenses to income
GRM analysis is based on the assumption that there is a __________ relationship between income and ________.
direct, value
GRM assumes there is __________ relationship between rental income and value.
a direct linear
GRMs are derived by dividing the _______________ by the _______________ at the time of sale.
sale price, gross monthly unfurnished market rent
Here are five comparable sales. Sale price / Monthly rent: 1. $142,000/$1,025. 2. $133,000/$1,000. 3. $128,500/$975 4. $145,000/$1,050. 5. $135,000/$1,000. What is the mean of the GRMs?
135.3
Here are three comparable sales. Sale 1 with a sale price of $127,000 and a monthly rent of $950. Sale 2 with a sale price of $132,000 and a monthly rent of $1025. Sale 3 with a sale price of $122,700 and a monthly rent of $1,000. What is the range of the GRMs?
- Range. $127,000 ÷ $950 = 133.7. $132,000 ÷ $1.025 = 128.8. $122,700 ÷ 100 = 122.7. 133.7 – 122.7 = 11.
How might an appraiser obtain expense ratio information for income properties?
reviewing the appraiser’s files, reading published studies, interviewing market participants
In a set of numbers, there is always a _______ but there is not always a _______.
mean, mode
In order for a comparable to be useful in extracting a GRM, it must have been __________ at the time it __________.
rented, sold
In order for an appraiser to appraise a 5-unit property for a federally related transaction, he/she must be a
certified general appraiser only
Properties with more than _____ living units are considered to be non-residential properties.
4
Residential properties are considered to be ________ unit(s).
one to four
The Fannie Mae 1007 form is intended to
estimate the market rent of the subject property
The Fannie Mae Single Family Comparable Rent Schedule is also known as Form
1007
The gross monthly unfurnished rent of the subject property is $760. The appraiser reconciles the GRM at 115. What is the indicated value of the subject property by income approach?
87400
The primary difference between GRM and GIM is that
GRM uses monthly rent, while GIM uses annual income
To appraise a non-complex 6-unit property for a federally-related transaction, you need to be a _______________
Certified General Appraiser
True or False: An appraiser would typically not value a 50-unit apartment complex with a gross rent multiplier (GRM).
TRUE
True or False: Contract rent and market rent are two different concepts.
TRUE
True or False: Expense ratio information is easier to obtain on single-unit residential properties than commercial properties.
FALSE
True or False: GRM analysis should not be used in areas with rent controls.
TRUE
True or False: New single-unit homes are frequently purchased as rental investment properties.
FALSE
What type of property is MOST likely to be appraised using a gross income multiplier?
10-unit
When arriving at a value indication utilizing a GRM, one component is the _______________ rent of the subject property.
gross monthly unfurnished market
When developing an appraisal, you calculate the following GRMs from comparable properties: 94.3, 90.1, 95.6, 109.2, 84.5, 100.7, 99.9. What is the median of the GRMs?
95.6
When developing an appraisal, you calculate the following GRMs from comparable properties: 94.3, 90.1, 95.6, 109.2, 84.5, 100.7, 99.9. What is the mode of the GRMs?
there is no mode
When the property being appraised is a one-unit property that will be used as an investment property, Fannie Mae requires that the appraiser must prepare a
Form 1004 and Form 1007
Which can be affected by extremes at either end of the distribution?
mean
Which statement is generally true in a market with rent control?
Sale prices are subject to more rapid fluctuations than rent.
Which term is defined as: “The relationship or ratio between the sale price or value of a property and its periodic gross rental income”?
Gross rent multiplier
Which term is defined as: “The relationship or ratio between the sale price or value of a property and its gross annual rental income”?
Gross income multiplier
Why does an appraiser need as much information as he or she can get about rental comparables?
to make sure that accurate and appropriate comparisons are made
