Definitions of Value and Common Terms
Fair Market value in continued use
“Fair Market Value in Continued Use” is the estimated amount, expressed in terms of money, that may reasonably be expected for a property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, including installation, as of a specific date and assuming that the business earnings support the value reported. This amount includes all normal direct and indirect costs, such as installation and other assemblage costs to make the property fully operational.
fair market value - installed
“Fair Market Value-Installed” is the estimated amount, expressed in terms of money, that may reasonably be expected for an installed property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, including installation, as of a specific date. This amount includes all normal direct and indirect costs, such as installation and other assemblage costs, necessary to make the property fully operational.
fair market value
“Fair Market Value” is the estimated amount, expressed in terms of money, that may reasonably be expected for a property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, as of a specific date.
fair market value - removal
“Fair Market Value-Removal” is the estimated amount, expressed in terms of money, that may reasonably be expected for an item of property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, considering removal of the property to another location, as of a specific date.
Orderly Liquidation value
“Orderly Liquidation Value” is the estimated gross amount, expressed in terms of money, that could be typically realized from a liquidation sale, given a reasonable period of time to find a purchaser(s), with the seller being compelled to sell on an as-is, where-is basis, as of a specific date.
forced liquidation value
“Forced Liquidation Value” is the estimated gross amount, expressed in terms of money, that could be typically 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.
Liquidation value in place
“Liquidation Value in Place” is the estimated gross amount, expressed in terms of money, that could be typically realized from a failed facility, assuming that the entire facility would be sold intact with a limited time to complete the sale, as of a specific date.
remaining useful life
Remaining Useful Life is the estimated period during which a property of a certain effective age is expected to actually be used before it is retired from service.
Effective age
Effective Age is the apparent age of a property in comparison with a new property of like kind; that is, the age indicated by the actual condition of a property.
normal useful life
Normal Useful Life is the estimated number of years that a new property will actually be used before it is retired from service. A property’s normal useful life relates to how long similar properties actually tend to be used, as opposed to the more theoretical economic life calculation of how long a property can profitably used.
These are some of the most common definitions of value and appraisal terms we use in equipment appraisal. All of these definitions and others can be found in the book: Valuing Machinery and Equipment, 2nd Edition, published by the American Society of Appraisers in 2005.