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Appraisal Terms
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- Value
- Appraisal
- Real Estate
- Real Property
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- Personal Property
- Intangible Property
- Fair Market Value - In Place
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- Fair Market Value
- Orderly Liquidation Value
- Liquidation Value
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General appraisal terms |
| Value |
The monetary worth of property,
goods, or services.
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| Appraisal |
The act or process of developing an opinion
of value.
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| Real
Estate |
An identified parcel or tract of land, including
improvements, if any. |
| Real
Property |
The interests, benefits, and rights inherent
in the ownership of real estate. |
| Personal
Property |
Identifiable portable and tangible objects that are considered by the general public as being "personal" e.g., furnishings, artwork, gems and jewelry, collectibles, machinery and equipment; all tangible property that is not classified as real estate. |
| Intangible
Property |
Goodwill or going concern value, patents
etc. |
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Commonly used appraisal definitions specific to machinery and equipment
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| Fair
Market Value - In Place |
Fair Market Value – In Place (FMV-IP)
is defined as that dollar amount typically obtained for
property between a willing Buyer/User and a willing Seller,
neither under any compulsion to buy or sell and both fully
aware of all relevant facts, with buyer and seller assuming
the retention of the property at its current location
for continuing operations. A financial analysis of the
company has not been performed, but the assumption has
been made that there is an adequate market for the end-product
produced and that there is competent management and adequate
working capital to support the continuation of business.
Value in place also includes certain intangible costs
including freight, sales tax, installation costs, engineering
costs, and any other associated turnkey factors. This
approach is used primarily in the valuation of fixed plant
and equipment. |
| Fair
Market Value |
Fair Market Value (FMV) is defined as that
dollar amount typically obtained for property in exchange
between a willing Buyer/User and a willing Seller, neither
under any compulsion to buy or sell and both fully aware
of all relevant facts. The anticipated marketing period
for this equipment under this definition is up to (nine)
months. |
| Orderly
Liquidation Value |
Orderly Liquidation Value (OLV) is equal
to the estimated gross amount typically realized in an
arms length transaction between an informed and willing
Seller and willing Buyer who is an informed end-user of
used equipment. The anticipated marketing period for the
equipment under this definition is up to (six) months.
This value assumes that the equipment will be sold on
an “as is, where is” basis with the buyer
assuming any costs related to dismantle and removal. In
addition, this value does not take into consideration
any disposal costs, such as assembly, transportation,
cleaning, security, advertising, and brokerage. |
| Liquidation
Value |
Liquidation Value (LV) is the estimated
gross amount typically realized from a properly advertised
and conducted public sale with the Seller being compelled
to sell within a brief time frame on an “as is,
where is” basis. For the purposes of this report,
the anticipated marketing period under this definition
is up to (90 days). The customary costs of sale associated
with a liquidation, such as broker or auctioneer fees
and selling expenses, would be a deduction from the indicated
liquidation value. |
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Note: These are commonly used definitions
and are modified as needed to meet the needs of appraisal
assignments. The time periods listed above are in parenthesis
since different equipment types experience varying marketing
cycles. However, FMV offers the greatest amount of time
to market the items and there is no sense of urgency;
OLV assumes a need to sell but with adequate time to
do so; LV assumes that business operations have ceased
or are about to end and that there is an urgent need
to liquidate. Regarding OLV, certain financial institutions
assume that the buyer is a dealer/broker of equipment,
and others assume that the buyer is an end-user. Regarding
FMV it is important to note that this is not a “retail”
value as would be experienced between an equipment dealer
and an end-user involving either a stated or implied
warranty. | |
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ad valorem tax basis
asset based financing
asset management
asset purchase or sale
asset recovery value
bankruptcy
bonding
business valuation
condemnation
estate planning
incorporation
insurance loss
settlement
investment syndication
joint-venture
lease projection
replacement cost
partnerships
purchase price allocation
tax planning |
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