In order to formalize China's real estate appraisal

an examination and registration system for real estate appraisers has been put into practice. China Institute of Real Estate Appraisers has edited a series of textbooks for this purpose and the standard rules and specifications for real estate appraisal are available. During reading the text book as well as the rules and specifications

the author found that there are some mistakes and uncertainty in the formula of overall capitalization rate. Because of its sensitivity to the value of real estate

it is extremely important to use correct overall capitalization rate. Based on the information collected

the author has systematically analyzed the overall capitalization rate formula

and clearly defined the concept involved. In this paper

it is expected to provide some insight into the improvement of real estate appraisal theory in China and offer some valuable reference for real estate practice.