USPAP 2008–2009
DCF analysis is an additional tool available to the appraiser and is best applied in developing value opinions in the context of one or more other approaches.
It is the responsibility of the appraiser to ensure that the controlling input is consistent with market evidence and prevailing market attitudes.
Market value DCF analyses should be supported by market-derived data, and the assumptions should be both market- and property-specific.
If using commercial software the appraiser should cite the name and version of the software and provide a brief description of the methods and assumptions inherent in the software.
DCF accounts for and reflects those items and forces that affect the revenue, expenses, and ultimate earning capacity of real estate and represents a forecast of events that would be considered likely within a specific market.
The results of DCF analysis should be tested and checked for errors and reasonableness.
Standards Rule 1-1(b) states that the appraiser must not commit a substantial error of omission or commission that significantly affects an appraisal.
USPAP 2008–2009 Edition
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