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LOS d: Contrast the limitations of the direct capitalization approach to those of the gross income multiplier technique. ffice ffice" />
Q1. 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.
Correct answer is C)
The gross income multiplier approach does not use a capitalization rate
Q2. 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 gross income multiplier approach.
B) The direct income capitalization approach.
C) The market extraction technique.
Correct answer is A)
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.
Q3. Which of the following valuation approaches is limited in its application to income producing properties?
A) Only the direct income capitalization approach.
B) Both the gross income multiplier approach and the direct income capitalization approach.
C) Neither the gross income multiplier approach nor the direct income capitalization approach.
Correct answer is B)
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.
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发表于 2009-5-21 13:54
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