IT CONTINUES TO be the case that, in spite of much effort by both academics and some practitioners, risk and uncertainty are, to say the least, poorly considered by most individuals involved in real estate analysis.

This is in spite of the fact that all appraisers are aware that many of the inputs and thus the outputs from appraisals and valuations are uncertain, and that this should be allowed for in the decision making associated with property as a risky investment! Explicit appraisal models using Discounted Cash Flow (DCF), use a reasonably detailed mathematical model of the investment situation into which appropriate and testable values may be input, even if they are uncertain. 

Pragmatically, analysts in other disciplines, and a few real estate analysts, use the techniques of risk analysis as the best available approach because they recognise that, however unwieldy they are, these methods are superior to doing nothing, and can actually add value to the quality of decision making. Lately there has been a growing interest in the idea of fuzzy systems and models as an alternative or replacement for probablistic risk analysis, since their initial exposition by Zadeh (1965), and more recent 'popularisation' by Kosko (1994).

This paper is an extension of earlier investigations of fuzzy methodology (Byrne 1995), which looked at the methodology as a potential substitute for 'normal' probablistic simulation models. It will critically examine the use of fuzzy methods, specifically for DCF analysis. DCF, and a number of the technical difficulties associates with DCF such as serial correlation in the cashflows (MacFarlane 1995), are examined using fuzzy methods, with a view to improving our general understanding of how DCF works and continuing the assessment of fuzzy methodology as a potentially useful tool.