please respond to Krystal. with. 150. words Krystal BRE-120, Real Estate Appra

please respond to Krystal. with. 150. words
Krystal
BRE-120, Real Estate Appraisal
Textbook Author: Walt H., Levin P., William P.
Chapters 9 & 10
November 21, 2023
Overview
The three key concepts discussed in this week’s reflections summary are Paired Data Analysis, Effective Gross Income (EGI), and Net Operating Income (NOI). In Chapter 9, Paired Data Analysis and the technique for measuring the effect on value will be discussed. Chapter 10, Effective Gross Income (EGI) and Net Operating Income (NOI) discusses how and why it is calculated to get gross and net operating income.
Key Concept from Chapter 9
Chapter 9, Sales Comparison Approach to Value, Paired Data Analysis. ‘Paired Data Analysis’ (also known as ‘matched pairs analysis’ or “paired data set analysis”) is a technique for measuring the effect on the value that is caused by differences in a single element of comparison” (Walt, et al., 2018, p. 298). This process is used to identify identical or closely similar properties in many different ways except for one. “Any difference in the sales prices of the properties is then attributed to the difference in the characteristic that varies” (Walt, et al., 2018, p. 298).
Key Concept from Chapter 10
Chapter 10, Income Approach to Value, Effective Gross Income (EGI). “Effective Gross Income (EGI) is defined as potential gross income, minus an allowance for vacancies and bad debt losses” (Walt, et al., 2018, p. 321). This is an allowance, and it is usually expressed as a percentage of potential gross income. Economic conditions will determine the amount of the percentage.
Key Concept from Chapter 10
Chapter 10, Income Approach to Value, Net Operating Income (NOI). “Net operating income (NOI) is the form of income that is most often used in direct capitalization. Net operating income is a more reliable indicator of value than potential or effective gross income because it represents the amount of income that is available as a return to the investor” (Walt, et al., 2018, p. 321). To determine net operating income, an appraiser will take the operating expenses for the property and subtract them from the effective gross income.
Summary
In this week’s summary, I learned that paired data analysis measures the effect on value caused by differences in a single element of comparison. I learned about the effect of gross income (EGI) and how it is calculated. Lastly, I learned about net operating income and how it is a more reliable indicator of value than effective gross income.