- Helps you better understand the real estate appraisal process.
- Enables you to read and understand real estate appraisal reports correctly.
- Enables you to communicate effectively with certified real estate appraisers.
By knowing the terminology used in the International Real Estate Valuation Standards (2022 Standards). You can make informed decisions about real estate The glossary applies to international valuation standards only and is not intended to define the basic terms of the valuation, accounting and finance fields that a valuer is expected to know.
Terminology:
Asset or assets:
For ease of reading the criteria and to avoid repetition, the terms “asset” and “assets” generally refer to the items that are the focus of the assessment task. Unless otherwise specified in the standard, these terms can be taken to mean and include each of the following words: “An asset is a set of assets and a liability is a set of liabilities: or a collection of assets and liabilities.”
Value basis:
Value bases (sometimes called value standards) describe the underlying principles on which values are based (see Standard 105): Methods and methods of evaluation Paragraph 10.1.)
Client:
“Client” refers to the person or persons or organization for whom the assessment is being conducted. This includes: External clients (i.e. when the trustee is contracted by a third party). As well as internal customers (i.e., reviews prepared for the employer).
Cost:
Payments or expenses required to acquire or create the asset.
Discount rate:
The rate of return used to convert a monetary amount payable in the future into a present value.
Fair value:
The estimated price for the transfer of an asset or liability between specific, willing and knowledgeable parties that reflects the interests of those parties.
Fair market value:
- The Organization for Economic Cooperation and Development (0802) defines “fair market value” as the price that a willing buyer would pay to a willing seller in an open market transaction.
- for U.S. tax purposes. Regulation 1-20.2031 states: “Fair market value is the price at which property could pass between a willing buyer and a willing seller provided they are not under duress to buy or sell and have reasonable knowledge of the relevant facts.” United States Internal Revenue Service.
Fair value (IFRS):
IFRS 13 defines “fair value” as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Intended use:
Use the results of the assessment or review of the assessment as determined by the assessor based on their communication with the client.
Intended user:
The client and any other party identified by name or type, as a user of the appraisal report or appraisal review provided by the appraiser based on a letter from the client.
Investment value:
The value of the asset to the owner or potential owner given their personal investment or operational goals (also known as the price).
Jurisdiction:
The term “jurisdiction” refers to the legal and regulatory environment in which the mining process is carried out. It includes laws and regulations enacted by government agencies (the state: state or municipality)” and the rules that some regulators establish depending on the purpose of the assessment (e.g: central banks and securities regulators).
Liquidation value:
The amount that can be realized when an asset or group of assets is sold on a piecemeal basis. The liquidation value should consider the costs of acquiring the assets in a saleable condition as well as the costs of disposal and removal of the activity. The liquidation value can be determined under two different value assumptions (see Standard 104 Basis of Value, Section 80), namely:
(a) A structured transaction with a typical marketing period.
(b) A compulsory deal with a short marketing period.
Market value:
The estimated amount at which an asset or liability should be exchanged on the valuation date between a willing buyer and a willing seller in a transaction on a neutral basis after proper marketing where each party acts knowingly and prudently without coercion or compulsion.
Price:
Monetary consideration or similar. Asking, offering, or paying for an asset, which may differ from the value.
Purpose:
“Purpose” refers to the reason or reasons for conducting the valuation.” General purposes include (but are not limited to) financial reporting and tax reporting purposes: Litigation support and transaction support. and support for secured lending decisions.
The asset being evaluated or the subject of the evaluation:
These terms refer to the asset(s) being valued in a particular valuation assignment.
Integrative value:
Integrated value arises from combining two or more assets or interests where the combined value is more than the sum of the separate values. If these integral values are only available to a specific buyer, then the integral value differs from the market value. Integral value reflects certain attributes of an asset that are only valuable to a particular buyer. The value added to the sum of the interests involved is often referred to as incremental value.
Evaluation:
A procedure or process of determining an opinion of the value of an asset on a specific value basis at a specific date in accordance with international valuation standards.
Evaluation method:
A valuation methodology that utilizes one or more specific valuation methods (see IAS 105 Valuation Methods and Techniques).
Assessment method:
A specific means of estimating value within a valuation method.
The purpose of the assessment or the purpose of the assessment:
See “Purpose”. “Purpose” refers to the reason or reasons for conducting the valuation.” General purposes include (but are not limited to) the purposes of financial reporting and tax reporting: Litigation support and transaction support. and support for secured lending decisions.
Evaluation references:
An “appraisal reviewer” is an appraiser who reviews the work of another appraiser. As part of the appraisal review, the reviewer may perform certain appraisal procedures or provide an opinion of value.
Value:
The opinion resulting from an appraisal process compliant with international appraisal standards. It is an estimate of either the most likely monetary consideration for an interest in an asset or the economic benefits of owning an interest in an asset based on that value basis.
Evaluator:
“Evaluator” is an individual or a group of individuals. or an individual in an organization, whether an employee (internal) or a contractor (external).” Possesses the qualifications, ability and experience to carry out the evaluation in an objective, neutral, impartial, fair and competent manner. In some jurisdictions, a license is required before a person can work as an appraiser.
Weight or priority:
“Weight” refers to the amount of reliance on a particular indicator to arrive at the final value (e.g. when using a single method. be weighed.
weighting:
“Weighting” refers to the process of analyzing and reconciling different indicators of value. They are usually of different styles and methods. This process does not include averaging the results of the assessments: This is unacceptable.
Price:
See Investment Value. The value of the asset to the owner or potential owner considering their personal investment or operational goals (also known as the price).
Source: International Valuation Standards 2022
