Which term is used to describe estimating value for residential properties using a rent multiplier?

• A. Gross Income Multiplier
• B. Gross Rent Multiplier
• C. Market Price
• D. Reconciliation

Answer: (B)

Using a rent multiplier means estimating value by applying a multiplier to the property's gross rental income. The term that describes this approach for residential properties is Gross Rent Multiplier. It’s the quick rule-of-thumb method where you multiply the annual gross rent by a GRM to get an estimated value (or divide price by gross annual rent to get the GRM). This method is simple and helpful for fast comparisons between similar rental properties, but it ignores operating expenses, vacancies, and capital needs, so it isn’t a precise valuation.

Gross Income Multiplier would involve gross income from all sources, not just rent, which makes it less typical for straightforward residential rent-based valuations. Market Price is the actual sale price, not a multiplier. Reconciliation is the appraisal step of resolving differing value indications, not a multiplier itself.