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multi-family comp

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paulina

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Jan 22, 2007
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Maryland
I'm using a sales comp for a multi-family that is the most similar to the subject but it has no rental amount listed as the monthly rent. I checked with the real estate agent and he doesnt know. Do I put UNKNOWN in the grid /or do I estimate the price of the rent??
 

Michigan CG

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The real estate agent is an idiot if he doesn't know, or he/she is incompetent or both.

To find out call the seller, or the buyer or go knock on the door and ask the tenants. Or call the other real estate agent.

Putting unknown is not acceptable unless you have given due diligence to find out the answer and then put that due diligence in your report, good or bad.
 

Mztk1

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Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
When you are appraising the fee simple interest of a subject property your GRM should be based off of market rents of the comparables, not actual rents. A lot of times they are the same in my area.

If you know the market rents of the subject and the two are identicial, or very similar, then you should be able to reasonably estimate the market rent of the comp.

Use the market rent.

I use market rent for all my comparables and discuss the difference of market and actual rents in my sales comparison approach comments, if they are different.
 

Ray Miller

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Feb 20, 2002
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Licensed Appraiser
State
Wisconsin
Tim and Jim have given good answers.

This is part of your research. I would hope you read the daily papers that rental units in the want ads. By doing that you can establish market rents in your area. In the rural area the market rents can be from none to all over the place depending in which burg, village, town or small rural city your subject happens to be in.

I have market rents going back three years in some areas. Some are on a cruve and some on a straight line.
 

Abester

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Jun 12, 2003
Professional Status
Certified General Appraiser
State
Florida
When you are appraising the fee simple interest of a subject property your GRM should be based off of market rents of the comparables, not actual rents.

Does this not kind of belay the purpose of looking for comparable market sales?
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
When you are appraising the fee simple interest of a subject property your GRM should be based off of market rents of the comparables, not actual rents. A lot of times they are the same in my area.

If you know the market rents of the subject and the two are identicial, or very similar, then you should be able to reasonably estimate the market rent of the comp.

Use the market rent.

I use market rent for all my comparables and discuss the difference of market and actual rents in my sales comparison approach comments, if they are different.


Jim this somewhat flys in the face of conventional wisdom. Market rates are certainly not the same for all properties and actual rents may show features in a property which either elevate it above market or decrease the ability of the property to achieve market rent.
Simply using market rents against the selling price will not result in an adequate measurement of either the GRM or the OAR and in my opinion is not market measurement at all.
I strongly urge those appraising apartments to use actual rents (and expenses) where available. If they are not availalbe perhaps you can estimate, but I would not place a great amount of reliance on the indicators of that sale because the income has been estimated.
Actual prices are based upon actual rents and the measurements should be of one to the other.
Such measurement can often provide you with indications as to various differences between the property which are important in your analysis.
 

Joyce Potts

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Florida
Of what use is this as a rental comp, if you don't know the rental income?
 

Michigan CG

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Michigan
Market rents should be definitely researched to see if the subject is realistic in its income. However, using actual rents determine the most reasonable income for the subject in most cases. Of course, like everything in appraisal, not every thing is black and white.

In larger income properties the actual rents are the most reliable. Just because market rent (in the appraiser's opinion) is $500 and the subject has 100 units renting for $400 does not mean one should use $500 per unit in the income approach. Give the owner an appraisal showing rents should be $500 and he raises them you might have a serious vacancy issue for some time.

Market rents might be more applicable to SFR and duplexes.
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
You can NOT estimate market rents on comps, people. Please tell me I'm missunderstanding some of your posts.
 
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