Keywords

securities data, discount rates, real property

Abstract

When the income approach is used to value real property, appraisers forecast anticipated cash flows from the property and discount those cash flows to arrive at a present value. To do this, appraisers must determine an appropriate rate for discounting the future cash flows. Market value is usually defined as the price between a willing buyer and a willing seller. Appraisers therefore should study the market for the type of properties involved to determine the discount rates used by buyers and sellers of those properties in actual transactions.

Original Publication Citation

H.B. Heaton. "On Using Data from Securities to Determine Discount Rates for Real Property" Journal of Property Tax Assessment and Administration, Volume 7, #2 (Winter 21), pp5-12.