Form 1025

[George Hatch]

BTW, I don't use the subject's actual rents for anything. I describe what they are as requested by the form, but consider them to be virtually meaningless unless they happen to correspond to the market rent. An exception exists when the subject property is rent-controlled in a jurisdiction where the sale of the subject does not provide the buyer with the wherewithal to change the rent,

"Rent control" refers to one type of legal limitation on the rents but there are others - we call them leases, leaseholds, deed restrictions and other forms of property ownership.

The purpose of a rent survey and forecast is to identify the market rents a buyer can anticipate for the subject property. Same with identifying GRMs. They reflect the anticipations of these participants.

So yeah, in many situations you would commonly forecast the market rents regardless of what this particular property owner *says* they've been doing; and you would commonly use market rents for the comparables in order to identify the anticipated GRMs the buyers have been using.

But (as you already noted) those rents and those GRMs aren't always directly comparable to your subject if there's some external control on the rents or occupancy. In those cases you can quantify the difference between what the market would otherwise normally allow vs what this particular set of property interest allows and use that as the basis for an adjustment for the property rights appraised.

While the mechanics for doing that probably exceed the technical competency of many residential appraisers (due to the limitations of their training and exposure to the Income Approach) it's one of those things that a CG could demonstrate to them a couple times and they could add it to their bag of tricks.