Bases of Value Definitions

Question 1

Market value

Answer 1

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 where the parties had each acted knowledgably, prudently and without compulsion

Question 2

Market Rent

Answer 2

The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and willing lessee on appropriate lease terms in an arms length transaction after proper marketing where the parties had each acting knowledgably, prudently and without compulsion

Question 3

Fair Value

Answer 3

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date

Question 4

Investment Value

Answer 4

The value of an asset to a particular owner or prospective owner for individual investment or operational objectives

Question 5

Mature Value

Answer 5

the value of an asset, investment, or financial instrument at the point when it has reached its full potential or has “matured.”

Question 6

Turnkey Value

Answer 6

Market value of a property, asset, or business that is fully completed, functional, and ready for immediate use or operation without requiring any additional work or investment.

Question 7

what are the differences between fair value and market value

Answer 7

MV - used for real estate financial markets
FV - used for financial reporting and accounting

MV - defined under IVS and RICS Red Book
FV - defined by IFRS 13 and GAAP

MV - reflects value under general market conditions
FV - reflects value to specific market participants

Overall - fair value looks tries to gauge the true worth of an asset and MV is the observed and actual value for which an asset or liability is exchanged