Reading 46: Income Property Analysis and Appraisal-LOS d 习题 direct, center, following, div, class

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Session 13: Alternative Asset Valuation
Reading 46: Income Property Analysis and Appraisal

LOS d: Contrast the limitations of the direct capitalization approach to those of the gross income multiplier technique.

 

 

 

All of the following are limitations to the gross income multiplier approach for real estate valuation EXCEPT:

A) gross rental income may be inappropriate when building-to-land ratios are different among otherwise comparable properties.

B) sales prices for comparable properties may not be current.

C) it may be difficult to obtain the necessary data to determine the appropriate capitalization rate.

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The gross income multiplier approach does not use a capitalization rate.

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Discontinuous pricing, lack of rental data, and the fact that gross rents may distort appraised values are all limitations of which of the following valuation techniques?

A) The direct income capitalization approach.

B) The market extraction technique.

C) The gross income multiplier approach.

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The direct income capitalization approach does not use gross rents. The market extraction technique is not a valuation technique per se. It is a technique used to determine capitalization rates for the direct income capitalization valuation approach.

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Which of the following valuation approaches is limited in its application to income producing properties?

A) Both the gross income multiplier approach and the direct income capitalization approach.

B) Only the direct income capitalization approach.

C) Neither the gross income multiplier approach nor the direct income capitalization approach.

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Both valuation approaches are limited to use with income producing properties. Neither approach can provide an accurate value estimate for owner-occupied properties because the benefit derived by the owner is difficult to measure in monetary terms.