Which two elements are necessary when using the Gross Income Multiplier to estimate value?

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Master the Mckissock General Appraiser Sales Comparison Approach Test with comprehensive quizzes and explanations. Enhance your skills in the appraiser profession and pass your exam with confidence!

Multiple Choice

Which two elements are necessary when using the Gross Income Multiplier to estimate value?

Explanation:
Gross Income Multiplier uses how much income a property generates in relation to its price. To apply it, you need two pieces: the property's gross income (the income figure you’ll use) and a price-based multiplier derived from comparable sales (the multiplier equals sale price divided by gross income). Once you have the subject’s gross income and that multiplier, you estimate value by multiplying the gross income by the multiplier. Expenses are not part of this method, so the necessary elements are income and sale price.

Gross Income Multiplier uses how much income a property generates in relation to its price. To apply it, you need two pieces: the property's gross income (the income figure you’ll use) and a price-based multiplier derived from comparable sales (the multiplier equals sale price divided by gross income). Once you have the subject’s gross income and that multiplier, you estimate value by multiplying the gross income by the multiplier. Expenses are not part of this method, so the necessary elements are income and sale price.

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