Bases Of Value Flashcards
What are the 4 bases of value as found in the red book?
. Market Value
. Market Rent
. Investment Value
. Fair Value
What is a basis of value?
It is a statement of the fundamental measurement assumptions of a valuation and must be stated in the report based on the appropriateness to apply
What is the Market Value definition?
The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arms length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion
What is Market Rent?
The estimated-amount a property should be leased on the valuation date between a willing lessor and lessee on appropriate terms terms in an arms length transaction after proper marketing where the parties had each acted knowledgeably, prudent and without compulsion.
What is Fair Value?
The price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date.
What is Investment Value?
The value of an asset to the owner or a prospective owner for individual investment or operational objectives, may also be know as worth
What is an Assumption?
A fact, condition or situation affecting the subject to a valuation that by agreement does not need verifying as part of the valuation process. Such as an assumption is made that the property is subject to vacant possession
What is a Special Assumption?
An assumption that assumes facts differ from the actual facts. Special assumption could be that the development is complete yet it has not been finished yet
What is a projected market value?
It is for the purpose of providing a lender with a simple numeric indication of the Valuers opinion of short term market trends and is to be used only for this purpose.
The definition is:
‘The estimated amount for which an asset is expected to exchange at a date after the valuation date, and specified by the valuer, between a willing buyer and a willing seller, in an arms length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’
The valuation should be carried out on the basis of market value but with a clearly stated and agreed special assumption unless instructed otherwise by the lender
It is an indication of the Valuers short term movements of the market
For market rent if tenants have made improvements what should be done at lease renewal?
The tenants improvements should be disregarded when renewing the lease or doing a rent review
S34 Landlord and Tenant Act 1954
What are the additional bases of value in IVS 104?
. Equitable value
. Synergistic value
. Liquidation value
There are three further Valuation bases in the UK national supplement:
. Existing as value (EUV)
. Existing use value for social housing (EUV-SH)
. Projected Market Value (PMV)
