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The income approach is a real estate appraisal valuation method. It is one of three major groups of methodologies, called valuation approaches , used by appraisers. It is particularly common in commercial real estate appraisal and in business appraisal.
Real Estate Valuation According to Standardized Methods: An Empirical Analysis (PDF). Humboldt-Universität zu Berlin, Wirtschaftswissenschaftliche Fakultät. doi:10.18452/3501. (411 KiB) A study of the theoretical soundness and empirical accuracy of the German income approach (includes the valuation equations for the Ertragswertverfahren
The income approach (similar to the methods used for financial valuation, securities analysis or bond pricing – where the implied property value is a function of the property's pro forma cash flow, or NOI in the context of real estate).
However, many small businesses will use the Seller Discretionary Method as a practical, simple method of business valuation. [8] This approach can then be blended with the income, asset-based, and market approaches for a robust valuation analysis. A number of business valuation models can be constructed that utilize various methods under the ...
In several contexts, DCF valuation is referred to as the "income approach". Discounted cash flow valuation was used in industry as early as the 1700s or 1800s; it was explicated by John Burr Williams in his The Theory of Investment Value in 1938; it was widely discussed in financial economics in the 1960s; and became widely used in U.S. courts ...
It is considered a full appraisal with all three approaches to value, cost approach, sales comparison approach, and income approach. [2] Requirements The report ...
Common estimation techniques include the comparable sales method, the depreciated cost method, and an income method approach. Property owners may also declare a value, which is subject to change by the tax assessor. Once the value is determined, the assessor typically notifies the last known property owner of the value determination.
There are at least six recognized methods of the income approach, with some authorities listing more. [5] Price premium method – estimates the value of a brand by the price premium it generates when compared to a similar but unbranded product or service. This must take into account the volume premium method.