4303_02A

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					  THE NATURE OF VALUE
• DISTINCTIONS AMONG PRICE,
  MARKET, COST, AND VALUE
  – PRICE:
    THE AMOUNT A PARTICULAR
    PURCHASER AGREES TO PAY AND A
    PARTICULAR SELLER AGREES TO
    ACCEPT UNDER THE CIRCUMSTANCES
    SURROUNDING THEIR TRANSACTION
– MARKET:
  A SET OF ARRANGEMENTS IN WHICH
  BUYERS AND SELLERS ARE BROUGHT
  TOGETHER THROUGH THE PRICE
  MECHANISM. DEFINED BY LOCATION,
  PRODUCTS, THE NUMBER OF BUYERS
  AND SELLERS, ETC.
– COST:
  IN THE CONTEXT USED IN APPRAISAL
  COST REFERS TO THE COST FOR
  PRODUCTION NOT EXCHANGE.

 A PRICE PAID IN THE PAST, OR THE
 AMOUNT NEEDED TO CONSTRUCT A
 BUILDING TODAY.
– VALUE:
  ANTICIPATION OF BENEFITS TO BE
  OBTAINED IN THE FUTURE.
  REPRESENTS THE MONETARY WORTH
  OF PROPERTY, GOODS, OR SERVICES TO
  BUYERS AND SELLERS.
• THE VALUE ESTIMATE MAY BE:
 –   MARKET VALUE
 –   USE VALUE
 –   ASSESSED VALUE
 –   OTHER VALUE ESTIMATE
             MARKET VALUE
• THE MOST PROBABLE PRICE AS OF A SPECIFIED
  DATE, IN CASH, OR OTHER PRECISELY REVEALED
  TERMS, FOR WHICH THE SPECIFIED PROPERTY
  RIGHTS SHOULD SELL AFTER REASONABLE
  EXPOSURE IN A COMPETITIVE MARKET UNDER
  ALL CONDITIONS REQUISITE TO FAIR SALE, WITH
  THE BUYER AND SELLER EACH ACTING
  PRUDENTLY, KNOWLEDGEABLY, AND FOR SELF-
  INTEREST, AND ASSUMING THAT NEITHER IS
  UNDER UNDUE DURESS.
   FUNDAMENTAL ASSUMPTIONS AND
           CONDITIONS

1. BUYER AND SELLER ARE MOTIVATED BY SELF-
   INTEREST.

2. BUYER AND SELLER ARE INFORMED AND ARE
   ACTING PRUDENTLY.

3. THE PROPERTY IS EXPOSED FOR A REASONABLE
   TIME ON THE OPEN MARKET.

4. PAYMENT IS MADE IN CASH, ITS EQUIVALENT,
   OR IN SPECIFIED FINANCING TERMS.
5. SPECIFIED FINANCING, IF ANY, WAS IN TERMS
   THAT ACTUALLY TOOK PLACE OR WERE
   GENERALLY AVAILABLE FOR THE PROPERTY
   TYPE IN ITS LOCALE ON THE EFFECTIVE
   APPRAISAL DATE.

6. THE EFFECT, IF ANY, ON THE AMOUNT OF
   MARKET VALUE OR ATYPICAL FINANCING,
   SERVICES, OR FEES SHALL BE CLEARLY AND
   PRECISELY REVEALED IN THE APPRAISAL.
            PROBABLE PRICE

• THE MOST LIKELY AMOUNT OF MONEY AT
  WHICH A PROPERTY WILL SELL (UNDER THE
  ECONOMIC, SOCIAL, AND POLITICAL
  CONDITIONS PREVAILING AT THE DATE OF THE
  APPRAISAL AND UNDER CONDITIONS REQUISITE
  TO FAIR SALE).
   COMPETITIVE AND OPEN MARKET

• A REASONABLE TIME IS ALLOWED FOR
  EXPOSURE ON THE OPEN MARKET.
    BUYER AND SELLER EACH ACTING
             PRUDENTLY

• TYPICALLY MOTIVATED; WELL INFORMED OR
  ADVISED; ACTING IN OWN SELF-INTEREST; AND
  NOT UNDER UNDUE DURESS.
  OTHER TYPES OF VALUE
• USE VALUE:
  – THE VALUE A SPECIFIC PROPERTY HAS
    FOR A SPECIFIC USE. AN EXAMPLE IS
    AGRICULTURAL USE VALUATION FOR
    PROPERTY TAX PURPOSES.
• ASSESSED VALUE:
 – APPLIES IN AD VALOREM TAXATION
   AND REFERS TO THE VALUE OF A
   PROPERTY ACCORDING TO THE TAX
   ROLLS. MAY OR MAY NOT CONFORM
   TO MARKET VALUE.
• INVESTMENT VALUE:
 – THE VALUE OF AN INVESTMENT TO A
   PARTICULAR INVESTOR BASED ON HIS
   OR HER INVESTMENT REQUIREMENTS.
     FACTORS OF VALUE
• UTILITY
  – THE ABILITY OF A PRODUCT TO SATISFY
    HUMAN WANTS. RELATES TO THE DEMAND
    SIDE OF THE MARKET.


• SCARCITY
  – THE PRESENT OR ANTICIPATED SUPPLY OF AN
    ITEM RELATIVE TO THE DEMAND. RELATES
    TO THE SUPPLY SIDE OF THE MARKET.
• DESIRE
  – THE PURCHASER’S WISH FOR AN ITEM.
    DEMAND SIDE OF THE MARKET.


• EFFECTIVE PURCHASING POWER
  – THE ABILITY OF AN INDIVIDUAL OR
    GROUP TO PARTICIPATE IN THE
    MARKET. DEMAND SIDE OF THE
    MARKET.

				
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posted:8/28/2011
language:English
pages:16