In property valuation, what is a multiplier?

A multiplier in property valuation refers to a factor used in the income approach to determine property value. This approach assesses the value of a property based on its ability to generate income, commonly used for investment properties. The multiplier is essentially derived from the relationship between the property's income-generating potential and its market value.

For instance, investors often calculate the value of a rental property by applying a multiplier, which might come from the Gross Rent Multiplier (GRM) or similar metrics. This method helps appraisers arrive at a property's worth by linking how much income it produces to its value in the marketplace.

The other options do not accurately define what a multiplier entails within the context of property valuation. Adjusting renovation costs does not involve a multiplier in the same way; rather, it concerns cost estimation and budgeting. A percentage reflecting market competition pertains more to market analysis than to a multiplier concept. Finally, a fixed value assigned to every property does not align with the flexible and market-responsive nature of a multiplier, which varies based on specific income characteristics and investment factors related to individual properties.