Market Value is variously described as:
- under conditions whereby (The Appraisal Institute, 2001):
- The price which a property might be expected to realise if sold in the open market by a willing seller.
- The best or highest price at which an interest in a property might be expected to be sold by private treaty at the date of valuation assuming a willing seller and a reasonable period within which to negotiate the sale, taking into account the nature of the property and the state of the market; values will remain constant throughout the period; the property will be freely exposed to the market and that no account is to be taken of additional bid by a special buyer.
- The highest price in terms of money which a property would fetch in a competitive and open market under all conditions requisite to a fair sale; where both the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue elicitation.
- The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer buyer and seller are typically motivated;
- both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest;
- a reasonable time is allowed for exposure in the open market;
- payment is made in terms of cash or in terms of financial arrangements comparable thereto; and
- the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
- The estimated amount for which an asset should exchange on the date of valuation between a willing seller and buyer in an arm’s-length transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently, and without compulsion (The Royal Institution of Chartered Surveyors’ Appraisal and Valuation Manual, 1996)
- The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgably, prudently, and without compulsion (International Valuation Standards Council, 2017).
Interpretive commentary, as published in International Valuation Standard
- The estimated amount …’ It is the best price reasonably obtainable by the seller and the most advantageous price reasonable obtainable by the vendor
- a property should exchange ….’ the value of property is an estimated amount
- on the date of valuation ….’ Market Value is time-specific, ; the definition assumes simultaneous exchange and completion of the contract
- between a willing buyer ….’ motivated but not compelled to buy
- a willing seller ….’ not over-eager nor forced to sell at any price
- in an arm’s length transaction ….’ the parties do not have any relationship
- after proper marketing ….’ exposure to the market in most appropriate manner
- wherein the parties had each acted knowledgeably, prudently …’ parties are reasonably informed; each will act prudently to seek the best price
- and without compulsion ….’ neither party is forced or unduly coerced to complete.
References
International Valuation Standards Council (2017)
The Appraisal Institute (2001)
The Royal Institution of Chartered Surveyors’ Appraisal and Valuation Manual, 1996.
