Improvement And Application Of Income Approach In Real Estate Appraisal

The income approach is the earliest method initiated and used in real estate appraisal. It takes the important part in real estate appraisal and is one of the worldwide accredited methods of capital estimate. Its limitations lies in these facts that it requests advanced technique in application, the calculating methods of net income can't unified, it can't ascertain the capitalization exactly and the standard of ascertaining benefit year is indefinite, etc. Now the capitalization theory of our country's real estate steal has some defects, which can't direct us to operate it correctly and effectively. The defects both in theory and practical make many real estate appraisers make no use it rashly, even though they know that it is a estimating method which is suitable for benefit real estate and potential benefit real estate. They only use market method and cost method. So it is necessary to study some questions of the real estate appraisal by the income approach.According to Marx's theory about the average profit rate, it may exist that the case, which the real estate investment can gain the average profit is the result of competition in economical society. The price of real estate should be the price, that is, the profit price of real estate = the market price of real estate. This is the standard of examining the reasonability and the practicality. Based on the standard, we carry out the study about some questions which the net profit in income approach is requested and the capitalization rate and profit year are ascertained, through investigating extensively the information about practicing the income approach to estimate the real estate and analyzing the regular pattern of law about real estate appraisal, so that the income approach may be more perfect method of the real estate appraisal.Whether the estimated value of the income approach is accurate depends on the facts whether the four facts of the net income, the capitalization rate, the profit year and the mathematics formula are accurate and whether it corresponds with the objective reality. The request of real estate's net income...