What they said.
There's all kinds of ways to do this stuff. Really just have to be clear on what you are doing and explain adjustments and that kind of thing. What you shouldn't do is use actual rents for your subject GRM (if actual rents aren't at market), while estimating that GRM based on market rents.
Think of this; what if the tenant was the sister of the owners sons wife, and was living there rent-free due to family connections? Would you use actual rent ($0) or market rent? Would a buyer continue the same below-market rent to the sellers sons wifes sister? What if the comp you use to generate a GRM had the owners sons wifes sister?
You are supposed to reconcile actual rents to market rents, and explain any differences. If not at market rent, there pretty much has to be a reason why not. You have to figure out why not and what the resulting influence on value is.
Most often, 1-4 units are rented monthly, so easy for the buyer to raise rents to market or kick out the old tenant and get one that pays market rent. So in terms of value, actual rents may not matter, if they can be brought to market rents within a short time. Report actual, say why they are low, and why market rents are better for estimating value. Turn it in and get paid. Move on to the next one.
BUT, what if the unit is leased and the new owner is stuck with low rent for another couple of years? Or if you have rent control so the below market rent can't be increased to market until that tenant moves out? In these cases, and others like them, you have some explaining to do, because a buyer will likely discount the price paid for the property to reflect the lower rental income until rents can be increased. Your GRM ought to be based on similar rent-controlled properties too. Lots of work here, make sure to charge accordingly.
And, in your example, if all duplexes are 20% below market rent, isn't that the market rent for duplexes?
I'm talking about appraising here, not filling out the form. Conceptually similar, though.
On a semi-related matter, one common mistake residential appraisers make with 1-4 unit appraisals is filling in the value from the sales approach, and then using the GRM that the form spits out at you as your GRM. In other words, the form calculates the GRM from your opined value in the sales approach. Not surprisingly, you get very consistent results from both the GRM and the sales approach. But you'll regret it when you make an error in the sales approach and can't see that it is a error since the GRM gives you the same value.
More than what you wanted, sorry, I'm at work.
