Market value.
The figure you can produce to someone who disagrees with it.
What market value means.
Market value is the estimated amount for which a property would exchange at the valuation date, between a willing buyer and a willing seller, after proper marketing and where both parties act knowledgeably and without compulsion. It is the definition used by the RICS Red Book and by the European Valuation Standards, and it is the one French courts and the tax authorities work from.
Three things follow. The value is dated, because a market moves. It assumes a normal sale, not a forced one, which is why a distressed price is not market value. And it must be evidenced, which is where an estimate and a valuation part company.
Evidence first, judgement second.
The comparison approach is the backbone: verified transactions on comparable properties, adjusted for location, floor area, floor level, condition, outlook and legal situation. In thin markets the panel is built deliberately, address by address, and the report explains why each comparable was kept or set aside.
Where the asset produces income, the income approach is run alongside, by capitalisation or discounted cash flow. The two results are then reconciled, and the report states which carries more weight and why.
Comparable evidence
Verified transactions, adjusted and explained, not an average applied to a postcode.
Cross-checking
A second method wherever the asset allows one.
Stated assumptions
Every assumption written down, so the figure can be tested.
Whenever the figure has to survive scrutiny.
Inheritance and gift filings, wealth tax, division of assets on divorce or between co-heirs, financing and mortgage security, negotiation of a sale or purchase, accounting and audit, and litigation.
In each of these the value is read by someone with an interest in disputing it. That is the standard the report is written to.
A value to establish?
Describe the property and what the figure will be used for.
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