If you appraise real estate which is normally purchased with a combination of debt and equity capital and you are not inputting the specific terms of the proposed financing- then you are probably not developing an accurate valuation. My Mortgage-Equity Software provides a proof showing the resulting value accurately produces your specified returns for both debt and equity capital.
Simply; If you develop a 5 or 10-year projection of Net Income and the lender and equity investors require specific financing terms and assumptions, there is only one value will produce the desired returns to the debt and equity components. My software is the only software on the market that will produce this value. In addition to estimating value using a specified loan-to-value ratio, the software also estimates value using a debt coverage ratio and a debt yield. Does your DCF model do that?
For the last 30 years real estate appraisers have been using DCF models that assume an all cash buyer. We know most real estate in the United States is financed with a certain amount of debt. If this is the case- shouldn’t you be using a mortgage-equity model with specific financing inputs rather than “pulling an overall discount rate out of the air?”