Study On Improvement Of Approach In Real Estate Appraisal

Real estate appraisal, in which real estate is targeted to follow certain regulations, reasonable method is used, and evaluation of the real estate's value is an objective activities. Under the background of Land Reform and Housing Commercialization, China's real estate evaluation has developed rapidly, which further promote the development of the social market economy.Real estate appraisal is a complex and highly theoretical subject, which involve a lot of professional knowledge. Based on different demand and ideas, several kinds of appraisal methods has been developed, such as Cost Method, Income Method, Market Comparison Method. And corresponding evaluation system has been formed based on the three traditional and commonly used methods.With the complexity of market condition, more and more objects need to be evaluated each day. Under such background, the traditional methods were not suitable any longer. Unless present methods get promoted, the social demand could not be satisfied and it is also difficult to ensure an objective and reasonable evaluation results.In this paper, the common problem existed in the three traditional methods will be studied:the shortage of proper method needs too much reliance on subjective judgment of professional evaluators, which makes the results not objective and unreasonable. Based on this idea, we attempt to establish quantitative models for evaluation, which greatly reduce subjective factors and promote the accuracy of evaluation results.In order to get these problems resolved, we start from appraisal theory and related concepts, and analyze the theoretical basis, applicable conditions and the existing problems of real estate evaluation. And then based on the deficiencies of Cost Method, Income Method and Market Comparison Method, Fussy Mathematics, Risk-benefit Analysis and Pair-Analysis are provided to resolve present problems. The value of new methods is that subjective factors getting greatly reduced and improving the accuracy of the evaluation. To be more specific, theory analysis and case analysis are combined in this paper, which could tell us the great advantages of these improved methods.This paper is divided into seven chapters, the main contents in each chapter are as follows:The first chapter is an introduction, which makes analysis of research background and significance. It also makes sure of the research approaches and framework, theory analysis and case analysis will be combined in this paper.The second chapter is a review section, which mainly takes a review of theoretical studies in real estate appraisal both from domestic and abroad, analyzes the current evaluation methods, and finds that current real estate evaluation, whose application is very limited, lacks quantitative analysis. Therefore, based on the advanced ideas and evaluation methods, the study on quantitative evaluation is needed, which will be conductive to the improvement of China's real estate appraisal methods.The third chapter is about theory analysis, in which the theory of real estate evaluation was analyzed, including the classical real estate value theory and the modern real estate value theory. At the same time, we make analysis for the conception of real estate appraisal, which pave the way for further research.The fourth chapter makes analysis of the traditional evaluation methods:Cost Method, Income Method and Market Comparison Method. From the conception, theoretical basis to conditions. And we put forward the shortcomings of the current evaluation methods, such as the determination of depreciation rate in Cost Method, the determination of capitalization rate in Income Method and the price factor correction in Market Comparison Method. These problems are partly due to subjective factors in evaluation, and how to resolve these problems will be discussed later in this paper.The fifth chapter is about the improvements of Cost Method. This chapter mainly discusses the new way of determining the depreciation rate, and we also make the Fuzzy Comprehensive Evaluation Model for the evaluation of real estate. At present, the determination of depreciation rate is relied upon the experience of professional evaluators, which impacts accuracy of the evaluation results. Based on the analysis, we put Fuzzy Comprehensive Evaluation into this paper, which could greatly help the evaluators make the evaluation work in a objective way and a more accurate price of the real estate.The sixth chapter is about the improvement of Income Method. This chapter mainly discusses the method of determining the capitalization rate. In fact, the capitalization rate is a capital returning rate, the higher the risk, the more the returns. This paper is based on the point of risk and benefit, and we think that the capitalization rate should reflect the industry risk and specific project risk, which could truly reflect the real benefits produced by the real estate. In this chapter, we start from the financial indexes of the evaluated industry, and then make comparison between the industry average index and the specific company, which could reflect the real business risk. With the help of Risk-Earning Analysis, we could avoid the subjective factors, and increase the accuracy of capitalization rate.The seventh chapter is about the improvement of Market Comparison Method. This chapter mainly discusses the factors revision in the evaluation and the way to get the comprehensive price of the real estate. The current method is based on the simple modification of the factors between the comparable cases, most of the work was conducted by the professional evaluators, and the lacking of experience leads the deviation in the evaluation results. In this chapter, we introduce the Pair-Analysis, and establish relevant evaluation model, which reflecting the connection degree of the evaluation target and comparable instances in a quantitative way. In this way, we provide a more accurate for factors correction, and reduce the impact of the subjectivity on the evaluation results, and a more reasonable price will get.In this paper, we conduct empirical research based on relevant theory and evaluation cases. And we try to explain the rationality of the way to improve the methods of real estate appraisal both in the theoretical way and the practical way. This combination of theory method and empirical method could better improve the real estate appraisal theory.