Market Value Assessments

Market Value Assessments & Premise of Value

At Australian Valuations our commitment is to deliver independent, accurate and supportable valuation advice to our clients. We deliver on our commitment by understanding our clients’ business operations, their asset requirements and the intended use of the valuation. Understanding your requirements is key to application of the ‘Premise of Value’ concept when providing market based appraisals.

‘Premise of Value’ is an assumption regarding the most likely set of transactional circumstances that may be applicable to the subject valuation. It is incumbent on the valuer to understand the valuation purpose and to determine the appropriate basis of value when providing a Market Value appraisal.

Value is defined as “…an economic concept referring to the monetary relationship between goods and services available for purchase and those who buy and sell them.”

The definition of Market Value is expressed in universal terms to reflect a general concept rather than specific circumstances. On its own the definition of Market Value doesn’t describe how a particular asset is to be presented for sale or any of the other specific circumstances that could have a significant impact on the valuation.  Application of the appropriate basis of value will depend on the purpose for which a valuation is required and the circumstances.  Below are some commonly used market value definitions.

Market Value

Market Value is defined as “…the estimated amount for which an asset 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.”

Market Value Existing Use

Market Value Existing Use is defined as “…the estimate amount for which an asset or group of assets 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 assuming the assets could be sold in the open market for their continued existing use, and that the earnings support the value reported.”

Market Value Existing Use gives consideration to the in-situ nature of the asset or assets and associated installation costs where the assets are valued as part of the continuation of the existing ‘going concern’ business operation to which they are employed.

Market Value In-Situ

Market Value In-Situ is defined as “…the estimated amount for which an asset or assets 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 whereby the assets will be sold by way of a private treaty sale as a whole where the assets will remain in their existing place and location (In-Situ) following sale.”

Market Value In-Situ gives consideration to the in-situ nature of the asset or assets and associated installation costs but not as part of the continuation of the existing ‘going concern’ business operation.

Market Value Ex-Situ

Market Value Ex-Situ is defined as “…the estimate amount for which an asset 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 with the assumption that the assets will be sold by way of a private treaty sale where the subject assets will be removed from their existing location (Ex-Situ) following sale.”

Market Value Ex-Situ presumes the asset or assets will be removed from their current location following the sale and that the buyer is responsible for all removal and relocation costs.