Definitions of Value

The following are approved definitions from the American Society of Appraisers M&TS Committee for Machinery & Equipment appraisals. Deviations from these definitions are allowed; however, we suggest having the definition and its limiting conditions prominently spelled out in the appraisal report so as not to be confusing or misleading (a USPAP requirement).

It is important to review the definitions of value with your appraiser and have an understanding of how they apply to your present needs to avoid any confusion that would necessitate proving out in a court of law.

  • Reproduction Cost New: The cost of reproducing a new replica of a property on the basis of current prices with the same or closely similar materials, as of a specific date.
  • Replacement Cost New: The current cost of a similar new property having the nearest equivalent utility as the property being appraised, as of a specific date.
  • Fair Market Value: an opinion expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, as of a specific date.
  • Fair Market Value - Installed: an opinion, expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts, considering market conditions for the asset being values, independent of earnings generated by the business in which the property is or will be installed, as of a specific date.
  • Fair Market Value - Removed: an opinion, expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts, considering removal of the property to another location, as of a specific date.
  • Fair Market Value in Continued Use with Assumed Earnings: an opinion, expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts, as of a specific date and assuming that the business earnings support the value reported, without verification.
  • Fair Market Value in Continued Use with an Earnings Analysis: an opinion, expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts, as of a specific date and supported by the earnings of the business.
  • Liquidation Value in Place : an opinion of the gross amount, expressed in terms of money that typically could be realized from a properly advertised transaction, with the seller being compelled to sell, as of a specific date, for a failed, non-operating facility, assuming that the entire facility is sold intact.
  • Orderly Liquidation : an opinion of the gross amount, expressed in terms of money, that typically could be realized from a liquidation sale, given a reasonable period of time to find a purchaser (or purchasers), with the seller being compelled to sell on an as-is, where-is basis, as of a specific date.
  • Forced Liquidation Value : an opinion of the gross amount, expressed in terms of money, that typically could be realized from a properly advertised and conducted public auction, with the seller being compelled to sell with a sense of immediacy on an as-is, where-is basis, as of a specific date.
  • Salvage Value : an opinion of the amount, expressed in terms of money that may be expected for the whole property or a component of the whole property that is retired from service for possible use elsewhere, as of a specific date.
  • Scrap Value : an opinion of the amount, expressed in terms of money that could be realized for the property if it were sold for its material content, not for a productive use, as of a specific date.
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