The GRM for a 1025

[FMV]

Good Morning AF-

Completed a 1025 for a lender. The reviewer is requesting a "generalize" statement for how I developed the GRM vs what I have already in the report. Another difficult lender/AMC.
Just checking to see if anyone on this forum has a "general" statement they utilize in their report?

 

[FMV]

Good Morning AF-

Completed a 1025 for a lender. The reviewer is requesting a "generalize" statement for how I developed the GRM vs what I have already in the report. Another difficult lender/AMC.
Just checking to see if anyone on this forum has a "general" statement they utilize in their report?

I feel my comments should be revised better anyhow.. just don't complete many of these types of assignments anymore.

THE G.R.M. USED IS FELT TO BE MOST INDICATIVE AND IS SUPPORTED BY THE LOCAL MARKETPLACE BASED ON INFORMATION AVAILABLE. LEASE INFORMATION IS DIFFICULT TO OBTAIN AND DIFFICULT TO VERIFY. MOST MULTI FAMILY DWELLINGS ARE OWNER OCCUPIED NOT INCOME PROPERTIES.

 

[J Grant]

I feel my comments should be revised better anyhow.. just don't complete many of these types of assignments anymore.

THE G.R.M. USED IS FELT TO BE MOST INDICATIVE AND IS SUPPORTED BY THE LOCAL MARKETPLACE BASED ON INFORMATION AVAILABLE. LEASE INFORMATION IS DIFFICULT TO OBTAIN AND DIFFICULT TO VERIFY. MOST MULTI FAMILY DWELLINGS ARE OWNER OCCUPIED NOT INCOME PROPERTIES.

The GRM is based on similar market rents in the area and represents an average of those rents, the rental information was obtained from MLS or leases, ( or where did you get it ?). Some of the rental rates are older than a year because many multi family dwellings are owner occupied or long term tenants, which results in a limited amount of current rental rates available.

Perhaps change it to a version of the above:

 

[Basically Rectangular]

Maybe something like "The GRM has been developed by analyzing the rents and sales prices of comparable properties within the marketing area." That is the general statement, I usually expand to include the number of comparable rentals and sales analyzed, a range of the rents, DOM, vacancy, etc.

 

[Tom D]

isn't the grm range from the comps you used relevant, or does he just want to know why you picked that specific number from the comps grm range. i would think a similar statement like how you choose the appraised value from that range would be used.

 

[J Grant]

I use the sale prices of the comps on the grid, but since not all the comps are rented or at market rates, I will use some rental rates from properties that were not on the grid. A statement should be both general yet indicate anything relevant specific to the sales and rental rates on the appraisal or in the market data.

 

[Metamorphic]

A GRM should be reconciled much in the fashion that your do your final opinion.

"I have reconciled to a GRM of 100. The range of GRMs extracted from the market (see Grid, see table...whatever) was between 89 and 125. Comp 2 is the most similar to the subject in location and presented a GRM of 103, Comp 3 was most similar to the subject in Unit Count/Configuration, but the rents were dated (over 18 months) so the GRM was likely unrealistically low (89). If the Comp 3 rents are indexed +5% the indicated GRM would be 98. The reconciled GRM of 100 is a mid point between Comp 2 and 3 GRM indications. "

 

[TMG]

It's a GRM "final reconciliation". I always include one. My GRMs are usually based on the most similar rent potential comps i.e. bedroom counts, and GBA.

Sample: "Comparables # 2 and # 4 are given most weight in determining a GRM of 110, as they are most similar in bedroom count and GBA. Comparable # 3 was also given consideration as it has the most recent leases".

 

[CGinMN]

The ratio of a property's sale price to its gross income is the gross rent multiplier (GRM). In developing a GRM to apply to the subject's gross annual income, the appraiser has analyzed the sales of similar income properties from the subject's market, including the properties analyzed in the sales comparison approach. When the actual rents of a comparable closely reflect market rents - based on actual leases, advertised rents, rental surveys, agent/investor interviews, etc. - no adjustments are necessary, and the implied GRM is a reliable indicator. However, as is often the case, when a property sells with below-market rents in place, market rents may be estimated and used to develop an appropriate GRM. The GRM comparables developed by the appraiser are reconciled into a final GRM, which is then applied to the subject's gross annual income to arrive at a value based on the income approach.

From here you can go on to the actual reconciliation, discussing the strengths and weaknesses of each of the comps.

 

[alebrewer]

It seems they may be asking how, specifically, you arrived at the particular GRM that you utilized. Kind of like reconciling a value conclusion - you're reconciling the GRM selection. What was the GRM range? Was there a central tendency? Did you select a GRM based on the compatibility of that comparable to the subject? etc.