2025 IAC RP - Adjustments to Capitalization Rates: Why Not?

Session Description

Part of typical appraisal practice for development of capitalization rates is that the appraiser narrativize differences between comparable sales and subject with non-specific and subjective verbiage such as “The subject is better located than Comparable #2 and in worse condition than Comparable #3; therefore the capitalization rate is X%.” This presentation will cover why a broad-brush analysis of capitalization rates is not sufficient; that a more structured and consistent methodology is necessary (similar to adjustment process in the Sales Comparison Approach); and that this enhanced methodology is supported by leading texts and economic literature.

Speaker

Martin Skolnik

Continuing Education

Review of this session recording will award 1.2 CE hour.