Research On Capitalization Rate In Real Estate Appraisal

In this paper, major efforts are devoted to vital parameters of capitalization rates applied in Income capitalization approach in real estates appraisal. As is known, capitalization rates play an important role in Income capitalization approach, as a slight alteration of the capitalization affects the appraisal outcomes greatly. What's more, there are many factors influencing capitalization rate, therefore, many problems arise in ascertaining the capitalization rate. For example, many errors occur in computing capitalization rates. What's more, it is difficult to collect data. The process of computing tends to be too subjective and the outcomes lack of comparability. Due to the above problems in ascertaining capitalization rates, it can be assumed that capitalization rate is one of the main factors in causing risks in REA. Thus, the ascertaining of capitalization determines the accuracy of profitable housing properties appraisal. On the other hand, it indirectly influences the rationality of the re-composition of capitals and the structural modulation. Furthermore, it influences the legitimate rights of the privies involved in real estate dealings; it influences the standardization of real estate markets; it influences the risks involved in real estate financing; it also influences real estate taxation. In addition, this is no universal approach to ascertaining capitalization rates at present. Instead, many methods exist side by side, through which results of enormous differences occur in appraising housing properties. Above all, it is not only necessary but also indispensable to do some further research into capitalization rates.My priority is given to ameliorate the Market Extraction Method, the traditional method of ascertaining capitalization rates, and to propose another method, which is based on professional and integrated judgments, to ascertain the capitalization rates of some specific objects. In applying this method, authorities of experts are made full use of. What's more, theory of fuzzy mathematics is used in choosing comparable and referential transaction examples. Closing degree is applied in choosing comparable transaction examples, which are the most similar with the pending appraised real estates. Then the closing degree between pending appraised real estates and comparable transaction examples is inverted into...