Source: IVSC - Perspectives Paper
The IVSC has issued this Perspectives Paper in a series designed to initiate discussion and debate on the topic of market value.
IVS (Effective 31st January 2022)
Cost(s) (noun): The consideration or expenditure required to acquire or create an Asset.
Price: The monetary or other consideration asked, offered or paid for an Asset, which may be different from the Value.
Value (noun): The opinion resulting from a valuation process that is compliant with IVS.It is an estimate of either the most probable monetary consideration for an interest in an asset or the economic benefits of holding an interest in an asset on a stated basis of value.
Investment Value/Worth: The value of an asset to the owner or a prospective owner given individual investment or operational objectives (may also be known as worth).
The most important item to take away from these definitions is that the concept of Market Value is one of many Bases of Value. Consequently, Market Value may differ, perhaps materially,from each of Cost, Price and Worth.
What is the Market Value conceptual framework?
Market Value is defined in IVS as:‘estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
This means that you get the 'real' valuation of your real estate with no hidden agendas.