GRM Analysis on a Quad

[Steven Brown]

Hello All,

I'm currently analyzing the numbers on a listed Quad. This is my first analyses I'm performing in determining what is the fair market value to place an offer on the property. I've looked at the immediate rents within a mile of this property and the GRM comes out to an average of 8.8 against 4 properties. These are 2/1 units. The listed Quad I'm looking has 2/1 units @ 870 sq. ft per unit renting currently from 800 to 950. Currently way below market rents which are ~1400/mo. The quad listed for 550K but has dropped to 520K. Using the current higher end rents @ 950, that produces a GRM 11.4, which is higher than what the market GRM is at 8.8. Using the market GRM and manipulating the GRM formula (Price = (GRM) x (Gross Annual Rent)), that puts this quad at a market value of ~401K. I want to submit an offer but offering ~120K less than what is listed seems like I may have not considered some additional details. Other than comparing market GRM, what else should I consider? I'm not sure how the listing agent came up with 520K if the current market GRM surrounding this property is @ 8.8. Should I be pulling comps on Single Family homes with similar total sq footage? Are they shooting for the moon and hoping no investor pays attention to the market GRM and listing this quad way above market price?

Any help on this would be much appreciated. If additional info I'm missing is needed I can provide this.

-Steve