Question
nnnnThe gross multiplier method of appraisal would be of little value when appraising:
nnnnSelections
nnnnA. Commercial property
nnnnB. Residential property
nnnnC. Apartment buildings
nnnnD. Public buildings
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Answer: D
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5 Keys Summary
nnnn• The Gross Multiplier Method (also known as the Gross Rent Multiplier, or GRM) is an appraisal technique used primarily for income-producing property by converting expected gross income into an estimated value.
nnnn• This method requires knowing the property’s gross rental income, and it applies only to properties that produce rent or income.
nnnn• Public buildings, such as city halls, churches, or schools (service buildings), are typically specialized, non-income-producing properties.
nnnn• Since public buildings do not generate rental income, the gross multiplier method is irrelevant and thus of little value for their appraisal.
nnnn• For appraising service-oriented properties like public buildings, the Cost Approach (Reproduction Cost Approach) is the most appropriate method because finding comparable sales or relying on income is difficult.
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