Part 8 Flashcards
The Nature of Value
“The actual or estimated amount required to create, reproduce, replace, or obtain a property.” (USPAP, Definitions)
Cost.
“The amount asked, offered, or paid for a property.” (USPAP, Definitions) This defines what?
Price.
“The monetary relationship between properties and those who buy, sell, or use those properties, expressed as an opinion of the worth of a property at a given time.” (USPAP, Definitions) This defines what?
Value.
- Utility
- Scarcity
- Desire
- Effective purchasing Power
These four factors describe what?
The four factor of value.
The ability of a product to satisfy a human want, need, or desire. This defines what?
Utility.
1 of 4 factors of value
The present or anticipated undersupply of an item relative to the demand for it. This defines what?
Scarcity.
1 of 4 factors of value
A purchaser’s wish for an item to satisfy human needs (e.g., shelter, clothing, food, companionship) or individual wants beyond essential life- support needs. This defines what?
Desire.
1 of 4 factors of value
The value a specific property has for a specific use. This defines what?
Use value.
For example, close to where I live there is a malting facility. The building improvements are very specialized for this particular use to the point that it would have little or no value on the open market (except for the land, of course). If someone wanted to know what the value of the property would be if it continued as a malting facility, they would request use value.
1 of several types of value
The ability of an individual or group to participate in a market, i.e., to acquire goods and services with cash or its equivalent. This defines what?
Effective purchasing power.
1 of 4 factors of value
The value of a property to a particular investor or class of investors based on the investor’s specific requirements. This defines what?
Investment value.
1 of several types of value
The market value of an established and operating business including the real property, personal property, financial assets, and the intangible assets of the business. This defines what?
Market value of the going concern
1 of several types of value
A type of value for insurance purposes. This defines what?
Insurable value.
- Insurable value is based on the cost of physical items subject to loss.
- Generally, insurable value is based on the building improvements, not the site or land.
1 of several types of value
The value of a property according to the tax rolls in ad valorem taxation.
Assessed value.
1 of several types of value
In 2007, the Financial Accounting Standards Board (FASB) defined _________ _________ as “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.
fair value
1 of several types of value
