Concepts Definitions
Value: What something is worth to a particular party. It can be defined as the present worth of future benefits, or what two or more parties are willing and able to pay for an asset, good, or service.
Appraisal: An estimate or opinion of the value of a piece of property as of a specific date. The primary purpose is to define the true average property value by analyzing both general and specific data.
Elements of Value: The four abstract parts or aspects essential to value are:
Utility: The capability to provide a service, meet a need, or provide gratification, inciting the wish to possess a property.
Scarcity: The lack of a readily available product.
Demand: A desire to own something coupled with the ability to afford it.
Transferability: The ease of selling the asset or consumer good.
Value in Use: A subjective and biased value estimate assigned to a property by its owner, often influenced by personal perceptions and memories.
Value in Exchange (Market Value): The objective value of a property or the potential offering price, as seen by an average person without bias. It is the most probable price a property should bring in a competitive and open market under conditions requisite to a fair sale, with both buyer and seller acting prudently and knowledgeably.
Principle of Anticipation: An appraisal principle stating that value is created by the expectation of future benefits or anticipated income/usage that will accrue to the owner.
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