What tool can an appraiser use to validate operating expenses and net income by comparison with similar properties?

The operating expense ratio (OER) is a key metric used in real estate appraisal to assess the efficiency of a property's operating costs relative to its income. By calculating the OER, which is the ratio of total operating expenses to effective gross income, appraisers can gauge how well an income-producing property is managed and how its expenses stack up against similar properties in the market.

This comparison can help verify whether the operating expenses reported for a particular property are reasonable and in line with industry standards. When appraisers analyze comparable properties, the OER provides a standardized way to assess and validate the financial performance of those properties, highlighting potential discrepancies in net income or operating expenses.

This approach is particularly meaningful when comparing investment properties with similar characteristics, as it allows for a more informed analysis based on market data. The insight gained from the OER can lead to more accurate appraisals and better investment decisions.