Cost, price, value Flashcards
What is cost?
Cost is the total expenditure to create an improvement including materials, labor, and land
Cost encompasses all expenses involved in producing or acquiring a property or asset.
What is price?
Price is the amount paid in a particular transaction (the contract price)
Price refers to the specific monetary value agreed upon by the buyer and seller.
What is value?
Value is the worth of something between many market participants
Value can fluctuate based on perceptions and market conditions.
What is assessed value?
Assessed value is the value used as a basis for property taxation
This value is determined by local government assessors for tax purposes.
What is the insurance value?
Insurance value is an estimate of the money required to replace a structure
This value helps determine the amount of coverage needed for insurance policies.
What is the investment value?
Investment value is the price investors would pay, given their own financing requirements and income tax situation
It reflects the specific value to an individual investor rather than the market.
What is liquidation value?
Liquidation value is the value associated with a rapid sale
This value is often lower than the market value due to the urgency of the sale.
What is the going-concern value?
Going-concern value is the value of an income-producing property or business characterized by a significant operating history
This value takes into account the ongoing operations and future earnings potential.
What is the salvage value?
Salvage value is the value at the end of a structure’s useful life
This is the estimated residual value after depreciation.
What is the market value?
Market value is the most probable price a property should bring in a competitive and open market
Assumes buyer and seller are acting prudently and knowledgeably; price is not affected by undue stimulus.
What are the characteristics of value? (DUST)
DUST:
* D - demand
* U - utility
* S - scarcity
* T - transferability
These characteristics help define and measure the value of an asset.
