Glossary

Comparable Data

Data generally used in a valuation analysis to develop value estimates; comparable data relate to properties that have characteristics similar to those of the property being valued (the subject property). Such data include sale prices, rents, income and expenses, and market-derived capitalisation and yield/discount rates.

Comparable Sales Method

(Market or Direct Market Comparison Method)

A valuation methodology using sales prices or rentals of assets similar to the subject asset as a basis for estimating its market value for sale or rent. The underlying assumption is that an investor will pay no more for a property than he or she would have to pay for a similar property of comparable utility.

Also called Sales Comparison Approach.

Compliance Statement

An affirmative statement attesting the fact that the Valuer has followed the ethical and professional requirements of the IVS Code of Conduct in performing the assignment. In some States, a Compliance Statement is known as Certification of Value. IVS 3, 5.1.10 and 5.1.10.1 deal with the contents of a compliance statement.

Cost Approach

One of the approaches to value determination in instances where limited or no market evidence exists. Depreciated replacement cost is an application of the cost approach used in assessing the value of specialised assets for financial purposes, where direct market evidence is limited.

A comparative approach to the value of property or another asset, that considers as a substitute for the purchase of a given property, the possibility of constructing another property that is an equivalent to the original or one that could furnish equal utility with no undue cost resulting from delay. The Valuer’s estimate is based on the reproduction or replacement cost of the subject property or asset, less total (accrued) depreciation.

The cost approach establishes the value of the real property by estimating the cost of acquiring land and building a new property with equal utility or adapting an old property to the same use with no undue cost due to delay. An estimate of entrepreneurial incentive or developer’s profit/loss is commonly added to land and construction costs. For older properties, the cost approach develops an estimate of depreciation including items of physical deterioration and functional obsolescence.

See also Depreciated Replacement Cost, Depreciation, Replacement Cost, and Reproduction Cost.

Depreciated Replacement Cost

An application of the cost approach used in assessing the value of specialised assets for financial reporting purposes, where direct market evidence is limited or unavailable.

The current cost of reproduction or replacement of an asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation.

See also Cost Approach

Depreciation

In the context of asset valuation, depreciation refers to the adjustments made to the cost of reproducing or replacing the asset to reflect physical deterioration and functional (technical) and economic (external) obsolescence in order to estimate the value of the asset in a hypothetical exchange in the market when there is no direct sales evidence available. In financial reporting, depreciation refers to the change made against income to reflect the systematic allocation of the depreciable amount of an asset over its useful life to the entity. It is specific to the particular entity and its utilisation of the asset, and is not necessarily affected by the market.

The systematic allocation of the depreciable amount of an asset over its useful life.

Desktop Review

A valuation review that is limited to the data presented in the report, which may or may not be independently confirmed. Generally performed using a checklist of items. The Valuer checks for the accuracy of calculations, the reasonableness of data, the appropriateness of methodology, and compliance with client guidelines, regulatory requirements, and professional standards.

Develop

To carry out any building, engineering, mining or other operations in, on, over or under the land or the making of any material change in the use of any building or land.

Discount Rate

A rate of return used to convert a monetary sum, payable or receivable in the future, into present value. Theoretically it should reflect the opportunity cost of capital, i.e., the rate of return the capital can earn if put to other uses having similar risk. Also called yield rate.

Discounted Cash Flow (DCF) Analysis

A financial modelling technique based on explicit assumptions regarding the prospective cash flow to a property or business. As an accepted methodology within the income approach to valuation, DCF analysis involves the projection of a series of periodic cash flows either to an operating property, a development property, or a business. To this projected cash flow series, an appropriate, market-derived discount rate is applied to establish the present value of the income stream associated with the property or business. In the case of operating real properties, periodic cash flow is typically estimated as gross income less vacancy and collection losses and less operating expenses/outgoings. The series of periodic net operating incomes, along with an estimate of the reversion/terminal value, anticipated at the end of the projection period, is then discounted. In the case of development properties, estimates of capital outlays, development costs, and anticipated sales income are estimated to arrive at a series of net cash flows that are then discounted over the projected development and marketing periods. In the case of a business, estimates of periodic cash flows and the value of the business at the end of the projection period are discounted.

Highest and Best Use

The most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued.

See also Market Value.

Improvements

Buildings, structures, or modifications to land, of a permanent nature, involving expenditures of labour and capital, and intended to enhance the value or utility of the property. Improvements have differing patterns of use and economic lives.

See also Value of Improvements.

Income Capitalisation Approach

A comparative approach to value that considers income and expense data relating to the property being valued and estimates value through a capitalisation process. Capitalisation relates income (usually net income) and a defined value type by converting an income amount into a value estimate. This process may consider direct relationships (whereby an overall capitalisation rate or all risks yield is applied to a single year’s income), yield or discount rates (reflecting measures of return on investment) applied to a series of incomes or a projected period, or both. The income approach reflects the principles of substitution and anticipation.

Incurable Depreciation

Those items of physical deterioration and functional obsolescence which are not economically feasible to cure.

Independent Valuer

A Valuer who meets the specific requirements of independence, which may attach to many assignments, and are applied by regulation or by law with some clients and in certain states.

Indirect Costs

Costs associated with construction or manufacture that cannot be actually identified in the asset. Examples include insurance, financing cost and taxes during construction, architect’s fees, management costs and legal expenses.

Loan Security

An asset which is legally nominated to be available to a lender for realisation and recovery of money owed following default by the borrower.

Market

The environment in which goods, services, and commodities trade between buyers and sellers through the price mechanism. The concept of a market implies an ability of goods and/or services to trade among buyers and sellers without undue restriction on their activities. A market can be local, national or international.

Market Approach

A general way of estimating a value indication for an intangible asset using one or more methods that compare the subject to similar assets that have been sold.

A general way of estimating a value indication of a business, business ownership interest or security using one or more methods that compare the subject to similar businesses, business ownership interests, or securities that have been sold.

Any approach to value based upon the use of data that reflect market transactions and reasoning that corresponds to the thinking of the market participants.

Market Rent

The estimated amount for which a property, or space within a property, should lease on the date of valuation between a willing lessor and a willing lessee on appropriate terms in an arm’s-length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Whenever market rent is provided, the “appropriate lease terms” which it reflects should also be stated.

Also called Economic Rent.

Market Value

The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.

The concept of Market Value reflects the collective perceptions and actions of a market and is the basis for valuing most resources in market-based economies. The professionally derived Market Value is an objective valuation of identified ownership rights to specific property as of a given date.

See also Highest and Best Use.

Professional Property Valuer

A person who possesses necessary qualifications, ability, and experience to estimate property value for a diversity of purposes including transactions involving transfers of property ownership, property considered as collateral; to secure loans and mortgages, property subject to litigation or pending settlement on taxes, and property treated as fixed assets in financial reporting. A Professional Property Valuer may also possess the specific expertise to perform valuations of other categories of property, i.e., personal property, businesses, and financial interests.

See also Independent Valuer, Valuer.

Property Company

A holding company in real property.

Rent(al)

See Market Rent.

Rent Escalations or Stepped Rent

Upward rental adjustments based on some external change or indexing, and specified in a lease clause.

The term, rent escalations, is North American usage; stepped rents is Commonwealth usage.

Replacement Cost (New)

A replacement cost estimate envisions constructing a structure of comparable utility, employing the design and materials that are currently used in the market.

The current cost of a similar new item having the nearest equivalent utility as the item being appraised.

The cost of replacing an asset with an equally satisfactory substitute asset; normally derived from the current acquisition cost of a similar asset, new or used, or of an equivalent productive capacity or service potential. Replacement cost assumes the use of modern materials, techniques and designs.

Report Date

The date of the valuation report. May be the same or different from the valuation date.

Sale and Leaseback

A simultaneous sale of real estate and lease of the same property to the seller. The buyer becomes the lessor, or landlord, and the seller becomes the lessee, or tenant. Because there may be unique circumstances or relationships between the parties, sale and leaseback transactions may or may not involve typical market terms.

Sales Comparison Approach

A comparative approach to value that considers the sales of similar or substitute properties and related market data and establishes a value estimate by processes involving comparison. In general, a property being valued (a subject property) is compared with sales of similar properties that have been transacted in the open market. Listing and offerings may also be considered.

A general way of estimating a value indication for personal property or an ownership interest in personal property, using one or more methods that compare the subject to similar properties or to ownership interests in similar properties. This approach to the valuation of personal property is dependent upon the Valuer’s market knowledge and experience as well as recorded data on comparable items.

Also called Comparable Sales Method.

Vacant Possession

In real estate this refers to a right to possession of land or built-up property in respect of which there is no current occupant.

The term, vacant possession, is Commonwealth usage.

Valuation Approach

In general, a way of estimating value that employs one or more specific valuation methods. Depending on the nature and purpose of the property, three valuation approaches may be applied. These are the sales comparison, income capitalisation, and cost approaches. Their application will enable the Valuer to determine Market Value or a value other than Market Value.

See Comparable Sales Method, Cost Approach, Income Capitalisation Approach, Market Approach, Sales Comparison Approach.

Valuation Certificate or Report

A document that records the instructions for the assignment, the basis and purpose of the valuation, and results of the analysis that led to the opinion of value. A Valuation Report may also explain the analytical processes undertaken in carrying out the valuation, and present meaningful information used in the analysis. Valuation Reports can be either oral or written. The type, content and length of a report vary according to the intended user, legal requirements, the property type, and the nature and complexity of the assignment.

The terms, Valuation Certificate and Valuation Report, are sometimes used interchangeably. As used in some States (e.g. the UK), the term Valuation Certificate designates a document in which the Valuer certifies the amount of the valuation of the property. The Valuation Certificate is usually a short letter, though it may also take the form of a detailed report. It includes the valuation date; purpose of the assignment; date of the certificate; assumptions upon which the valuation is based; and the name, address and qualification of the Valuer, Certification of Value as used in other States (e.g., the US) is a statement in which the Valuer affirms that the facts presented are correct, the analyses are limited only by the reported assumptions, the Valuer’s fee is contingent upon any aspect of the report, and the Valuer has performed the valuation in compliance with ethical and professional standards.

Valuation Date

The date as of which the Valuer’s opinion of value applies. Also referred to as Effective Date and/or As of Date.

Valuation Method

Within valuation approaches, a specific way to estimate a value.

Valuation Procedure

The act, manner, and technique of performing the steps of a valuation method.

Valuation Review

A valuation assignment that covers a range of types and purposes. The principal characteristic all valuation reviews have in common is that one Valuer exercises impartial judgement in considering the work of another Valuer. A valuation review may support the same value conclusion in the valuation under review or it may result in a disagreement with that value conclusion. Valuation reviews provide a credibility check on the valuation as well as a check on the strength of the work of the Valuer who developed it, as regards the Valuer’s knowledge, experience, and independence.

Valuation organisations around the world distinguish between various types of reviews, e.g., administrative (compliance) reviews, technical reviews, desk reviews, field reviews, reviews to ensure that a valuation has been carried out in accordance with professional standards (where the bases of valuation used in the valuation under review are accepted), reviews that muster general market information to support or contest the value conclusion, and reviews that examine the specific data in the valuation under review with comparable data from a sample group.

Valuation Standards

The International Valuation Standards (IVS), unless otherwise specified.

Value

The price most likely to be concluded by the buyers and sellers of a good or service that is available for purchase. Value establishes the hypothetical or notional price that buyers and sellers are most likely to conclude for the good or service. Thus, value is not a fact, but an estimate of the likely price to be paid for a good or service available for purchase at a given time.

Value in Exchange

The value as recognised by a market in which exchange of asset ownership hypothetically, or notionally, takes place. The IVSC definition of Market Value appropriate for financial reporting is based upon the principle of value in exchange, not value in use.

The value, in terms of cash, of a property which is bartered for another asset or assets, cash being a yardstick by which the comparative value of each can be assessed.

Value in Use

The value a specific property has for a specific use to a specific user and therefore non-market related. This value type focuses on the value that specific property contributes to the entity of which it is a part, without regard to the property’s highest and best use or the monetary amount that might be realised upon its sale.

The present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

The present value of the future cash flows expected to be derived from an asset or cash-generating unit.

It should be noted that the above definitions, which apply to financial reporting, consider the value of an asset at the end of its useful life. This meaning differs from the way the term is commonly used in valuation practice.

Value of Improvements

The value added to the land by improvements such as buildings, structures or modifications to the land, of a permanent nature, involving expenditures of capital, and intended to enhance the value or utility of the property. Improvements have differing patterns of use and economic lives.

Valuer

One who possesses the necessary qualifications, ability, and experience to execute a valuation. Licensing or Registration is required before one can act as a Valuer.

See also Professional Property Valuer.

Written Report

The results of a valuation communicated to a client in writing, which includes electronic communication. Written reports may be detailed narrative documents containing all pertinent materials examined and analyses performed to arrive at a value conclusion, or abbreviated narrative documents, including periodic updates of value, forms used by governmental and other agencies, and letters to clients.

Comparable Data	Data generally used in a valuation analysis to develop value estimates; comparable data relate to properties that have characteristics similar to those of the property being valued (the subject property). Such data include sale prices, rents, income and expenses, and market-derived capitalisation and yield/discount rates.
Comparable Sales Method (Market or Direct Market Comparison Method)	A valuation methodology using sales prices or rentals of assets similar to the subject asset as a basis for estimating its market value for sale or rent. The underlying assumption is that an investor will pay no more for a property than he or she would have to pay for a similar property of comparable utility. Also called Sales Comparison Approach.
Compliance Statement	An affirmative statement attesting the fact that the Valuer has followed the ethical and professional requirements of the IVS Code of Conduct in performing the assignment. In some States, a Compliance Statement is known as Certification of Value. IVS 3, 5.1.10 and 5.1.10.1 deal with the contents of a compliance statement.
Cost Approach	One of the approaches to value determination in instances where limited or no market evidence exists. Depreciated replacement cost is an application of the cost approach used in assessing the value of specialised assets for financial purposes, where direct market evidence is limited. A comparative approach to the value of property or another asset, that considers as a substitute for the purchase of a given property, the possibility of constructing another property that is an equivalent to the original or one that could furnish equal utility with no undue cost resulting from delay. The Valuer’s estimate is based on the reproduction or replacement cost of the subject property or asset, less total (accrued) depreciation. The cost approach establishes the value of the real property by estimating the cost of acquiring land and building a new property with equal utility or adapting an old property to the same use with no undue cost due to delay. An estimate of entrepreneurial incentive or developer’s profit/loss is commonly added to land and construction costs. For older properties, the cost approach develops an estimate of depreciation including items of physical deterioration and functional obsolescence. See also Depreciated Replacement Cost, Depreciation, Replacement Cost, and Reproduction Cost.
Depreciated Replacement Cost	An application of the cost approach used in assessing the value of specialised assets for financial reporting purposes, where direct market evidence is limited or unavailable. The current cost of reproduction or replacement of an asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation. See also Cost Approach
Depreciation	In the context of asset valuation, depreciation refers to the adjustments made to the cost of reproducing or replacing the asset to reflect physical deterioration and functional (technical) and economic (external) obsolescence in order to estimate the value of the asset in a hypothetical exchange in the market when there is no direct sales evidence available. In financial reporting, depreciation refers to the change made against income to reflect the systematic allocation of the depreciable amount of an asset over its useful life to the entity. It is specific to the particular entity and its utilisation of the asset, and is not necessarily affected by the market. The systematic allocation of the depreciable amount of an asset over its useful life.
Desktop Review	A valuation review that is limited to the data presented in the report, which may or may not be independently confirmed. Generally performed using a checklist of items. The Valuer checks for the accuracy of calculations, the reasonableness of data, the appropriateness of methodology, and compliance with client guidelines, regulatory requirements, and professional standards.
Develop	To carry out any building, engineering, mining or other operations in, on, over or under the land or the making of any material change in the use of any building or land.
Discount Rate	A rate of return used to convert a monetary sum, payable or receivable in the future, into present value. Theoretically it should reflect the opportunity cost of capital, i.e., the rate of return the capital can earn if put to other uses having similar risk. Also called yield rate.
Discounted Cash Flow (DCF) Analysis	A financial modelling technique based on explicit assumptions regarding the prospective cash flow to a property or business. As an accepted methodology within the income approach to valuation, DCF analysis involves the projection of a series of periodic cash flows either to an operating property, a development property, or a business. To this projected cash flow series, an appropriate, market-derived discount rate is applied to establish the present value of the income stream associated with the property or business. In the case of operating real properties, periodic cash flow is typically estimated as gross income less vacancy and collection losses and less operating expenses/outgoings. The series of periodic net operating incomes, along with an estimate of the reversion/terminal value, anticipated at the end of the projection period, is then discounted. In the case of development properties, estimates of capital outlays, development costs, and anticipated sales income are estimated to arrive at a series of net cash flows that are then discounted over the projected development and marketing periods. In the case of a business, estimates of periodic cash flows and the value of the business at the end of the projection period are discounted.
Highest and Best Use	The most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued. See also Market Value.
Improvements	Buildings, structures, or modifications to land, of a permanent nature, involving expenditures of labour and capital, and intended to enhance the value or utility of the property. Improvements have differing patterns of use and economic lives. See also Value of Improvements.
Income Capitalisation Approach	A comparative approach to value that considers income and expense data relating to the property being valued and estimates value through a capitalisation process. Capitalisation relates income (usually net income) and a defined value type by converting an income amount into a value estimate. This process may consider direct relationships (whereby an overall capitalisation rate or all risks yield is applied to a single year’s income), yield or discount rates (reflecting measures of return on investment) applied to a series of incomes or a projected period, or both. The income approach reflects the principles of substitution and anticipation.
Incurable Depreciation	Those items of physical deterioration and functional obsolescence which are not economically feasible to cure.
Independent Valuer	A Valuer who meets the specific requirements of independence, which may attach to many assignments, and are applied by regulation or by law with some clients and in certain states.
Indirect Costs	Costs associated with construction or manufacture that cannot be actually identified in the asset. Examples include insurance, financing cost and taxes during construction, architect’s fees, management costs and legal expenses.
Loan Security	An asset which is legally nominated to be available to a lender for realisation and recovery of money owed following default by the borrower.
Market	The environment in which goods, services, and commodities trade between buyers and sellers through the price mechanism. The concept of a market implies an ability of goods and/or services to trade among buyers and sellers without undue restriction on their activities. A market can be local, national or international.
Market Approach	A general way of estimating a value indication for an intangible asset using one or more methods that compare the subject to similar assets that have been sold. A general way of estimating a value indication of a business, business ownership interest or security using one or more methods that compare the subject to similar businesses, business ownership interests, or securities that have been sold. Any approach to value based upon the use of data that reflect market transactions and reasoning that corresponds to the thinking of the market participants.
Market Rent	The estimated amount for which a property, or space within a property, should lease on the date of valuation between a willing lessor and a willing lessee on appropriate terms in an arm’s-length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Whenever market rent is provided, the “appropriate lease terms” which it reflects should also be stated. Also called Economic Rent.

Market Value	The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion. The concept of Market Value reflects the collective perceptions and actions of a market and is the basis for valuing most resources in market-based economies. The professionally derived Market Value is an objective valuation of identified ownership rights to specific property as of a given date. See also Highest and Best Use.
Professional Property Valuer	A person who possesses necessary qualifications, ability, and experience to estimate property value for a diversity of purposes including transactions involving transfers of property ownership, property considered as collateral; to secure loans and mortgages, property subject to litigation or pending settlement on taxes, and property treated as fixed assets in financial reporting. A Professional Property Valuer may also possess the specific expertise to perform valuations of other categories of property, i.e., personal property, businesses, and financial interests. See also Independent Valuer, Valuer.
Property Company	A holding company in real property.
Rent(al)	See Market Rent.
Rent Escalations or Stepped Rent	Upward rental adjustments based on some external change or indexing, and specified in a lease clause. The term, rent escalations, is North American usage; stepped rents is Commonwealth usage.
Replacement Cost (New)	A replacement cost estimate envisions constructing a structure of comparable utility, employing the design and materials that are currently used in the market. The current cost of a similar new item having the nearest equivalent utility as the item being appraised. The cost of replacing an asset with an equally satisfactory substitute asset; normally derived from the current acquisition cost of a similar asset, new or used, or of an equivalent productive capacity or service potential. Replacement cost assumes the use of modern materials, techniques and designs.
Report Date	The date of the valuation report. May be the same or different from the valuation date.
Sale and Leaseback	A simultaneous sale of real estate and lease of the same property to the seller. The buyer becomes the lessor, or landlord, and the seller becomes the lessee, or tenant. Because there may be unique circumstances or relationships between the parties, sale and leaseback transactions may or may not involve typical market terms.
Sales Comparison Approach	A comparative approach to value that considers the sales of similar or substitute properties and related market data and establishes a value estimate by processes involving comparison. In general, a property being valued (a subject property) is compared with sales of similar properties that have been transacted in the open market. Listing and offerings may also be considered. A general way of estimating a value indication for personal property or an ownership interest in personal property, using one or more methods that compare the subject to similar properties or to ownership interests in similar properties. This approach to the valuation of personal property is dependent upon the Valuer’s market knowledge and experience as well as recorded data on comparable items. Also called Comparable Sales Method.
Vacant Possession	In real estate this refers to a right to possession of land or built-up property in respect of which there is no current occupant. The term, vacant possession, is Commonwealth usage.
Valuation Approach	In general, a way of estimating value that employs one or more specific valuation methods. Depending on the nature and purpose of the property, three valuation approaches may be applied. These are the sales comparison, income capitalisation, and cost approaches. Their application will enable the Valuer to determine Market Value or a value other than Market Value. See Comparable Sales Method, Cost Approach, Income Capitalisation Approach, Market Approach, Sales Comparison Approach.
Valuation Certificate or Report	A document that records the instructions for the assignment, the basis and purpose of the valuation, and results of the analysis that led to the opinion of value. A Valuation Report may also explain the analytical processes undertaken in carrying out the valuation, and present meaningful information used in the analysis. Valuation Reports can be either oral or written. The type, content and length of a report vary according to the intended user, legal requirements, the property type, and the nature and complexity of the assignment. The terms, Valuation Certificate and Valuation Report, are sometimes used interchangeably. As used in some States (e.g. the UK), the term Valuation Certificate designates a document in which the Valuer certifies the amount of the valuation of the property. The Valuation Certificate is usually a short letter, though it may also take the form of a detailed report. It includes the valuation date; purpose of the assignment; date of the certificate; assumptions upon which the valuation is based; and the name, address and qualification of the Valuer, Certification of Value as used in other States (e.g., the US) is a statement in which the Valuer affirms that the facts presented are correct, the analyses are limited only by the reported assumptions, the Valuer’s fee is contingent upon any aspect of the report, and the Valuer has performed the valuation in compliance with ethical and professional standards.
Valuation Date	The date as of which the Valuer’s opinion of value applies. Also referred to as Effective Date and/or As of Date.
Valuation Method	Within valuation approaches, a specific way to estimate a value.
Valuation Procedure	The act, manner, and technique of performing the steps of a valuation method.
Valuation Review	A valuation assignment that covers a range of types and purposes. The principal characteristic all valuation reviews have in common is that one Valuer exercises impartial judgement in considering the work of another Valuer. A valuation review may support the same value conclusion in the valuation under review or it may result in a disagreement with that value conclusion. Valuation reviews provide a credibility check on the valuation as well as a check on the strength of the work of the Valuer who developed it, as regards the Valuer’s knowledge, experience, and independence. Valuation organisations around the world distinguish between various types of reviews, e.g., administrative (compliance) reviews, technical reviews, desk reviews, field reviews, reviews to ensure that a valuation has been carried out in accordance with professional standards (where the bases of valuation used in the valuation under review are accepted), reviews that muster general market information to support or contest the value conclusion, and reviews that examine the specific data in the valuation under review with comparable data from a sample group.
Valuation Standards	The International Valuation Standards (IVS), unless otherwise specified.
Value	The price most likely to be concluded by the buyers and sellers of a good or service that is available for purchase. Value establishes the hypothetical or notional price that buyers and sellers are most likely to conclude for the good or service. Thus, value is not a fact, but an estimate of the likely price to be paid for a good or service available for purchase at a given time.
Value in Exchange	The value as recognised by a market in which exchange of asset ownership hypothetically, or notionally, takes place. The IVSC definition of Market Value appropriate for financial reporting is based upon the principle of value in exchange, not value in use. The value, in terms of cash, of a property which is bartered for another asset or assets, cash being a yardstick by which the comparative value of each can be assessed.
Value in Use	The value a specific property has for a specific use to a specific user and therefore non-market related. This value type focuses on the value that specific property contributes to the entity of which it is a part, without regard to the property’s highest and best use or the monetary amount that might be realised upon its sale. The present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The present value of the future cash flows expected to be derived from an asset or cash-generating unit. It should be noted that the above definitions, which apply to financial reporting, consider the value of an asset at the end of its useful life. This meaning differs from the way the term is commonly used in valuation practice.
Value of Improvements	The value added to the land by improvements such as buildings, structures or modifications to the land, of a permanent nature, involving expenditures of capital, and intended to enhance the value or utility of the property. Improvements have differing patterns of use and economic lives.
Valuer	One who possesses the necessary qualifications, ability, and experience to execute a valuation. Licensing or Registration is required before one can act as a Valuer. See also Professional Property Valuer.
Written Report	The results of a valuation communicated to a client in writing, which includes electronic communication. Written reports may be detailed narrative documents containing all pertinent materials examined and analyses performed to arrive at a value conclusion, or abbreviated narrative documents, including periodic updates of value, forms used by governmental and other agencies, and letters to clients.

Glossary

Glossary

Bee