There are many different designations or definitions of value.

They may be divided into the

following two main classifications:

A. Utility Value, which is value directed toward a particular use. This frequently is
termed subjective value and includes valuation of amenities which attach to a property
or a determination of value for a specified purpose or for a specific person.
B. Market value, which represents the amount in money (cash or the equivalent) for
which a property can be sold or exchanged in prevailing market conditions at a given
time or place as a result of market balancing. It may be based on a “willing buyer”
and “willing seller” concept. This is frequently termed the objective value, since it is
not subject to restrictions of a given project.
1. Market Value

“Market value is an estimated amount of the interest or legal right of a person in a property,
to derive existing and future benefit by putting land and building to best possible legal and
potential use.” IVS (International valuation standard) (IVSC 2017)

“Market value is 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, where in the parties had each acted knowledgably, prudently and without
compulsion

There is virtually universal consensus that the term investment value means a value based on
expected earnings or monetary return to an investor.

In real estate terminology, investment value is defined as “value to a particular investor,

based on individual investment requirements, as distinguished from the concept of market
value, which is impersonal and detached.

1. Occupation value and investment value:

The main intention of every purchaser of a real estate is to invest his capital so as to obtain
enough return from it. Thus, the investment value of a property indicates the amount offered
by a prudent purchaser by keeping in view the advantages of possessing the property from
investment point of view. The real property shows a steady rate of appreciation in value and
as it is indestructible in character, the prudent investors prefer to purchase the real estate.
With inflation occurring in an economy, there is a strong demand for investment in the
selected real estates of the locality.

But in some cases, the purchasers are attracted to own the property for occupying for their
personal uses. The amount offered by such purchasers is the occupation value of the property.
The general considerations as discussed above for supply and demand of real estate’s affect
the occupation value. In addition, the following three factors tend to develop a wide gap
between the occupation value and the investment value of a real estate:

a) Government Acts: The restrictions imposed on the property by certain government

Acts may considerably decrease its occupation value. For instance, as per provisions
 of Rent Restrictions Act, the owner of the property can neither increase the rent of a
tenant nor can evict him. Thus, the restriction is put up on the income which the
owner may derive from his property and the powers of the owner to obtain possession
of his property also become limited in extent. It is for this reason that the properties
with vacant possession are sold at fancy prices as compared to the properties occupied
by the tenants.
b) Intensity of demand: The occupation value of a property is determined by the
intensity of demand of the prospective occupier. The stronger the demand, the higher
is the occupation value. In such cases, the purchaser is satisfied with less return on his
capital as compared to other forms of investment. The intensive demand may be due
to various factors such as status in society, availability of surplus fund, etc.
c) Trade conditions: The occupation value of units such as factories, workshops, go
downs, shops, hotels, etc. will be higher as such units are bought by the purchasers to
run their own business activities. Hence, if trade conditions are good, the occupation
value will tend to rise and if reverse is the case, it will tend to fall. It may be noted
that in bad times, the occupation value of premises which are constructed to run
certain special type of business activities will be considerably lower as sizeable
amount will have to be spent to put such premises to some other uses.

There can be many valid reasons for the investment value to one particular owner or
prospective owner to be different from the fair market value. These reasons include the
following:

 Differences in estimates of future earning power

 Differences in perception of the degree of risk
 Differences in tax status
 Synergies with other operations owned or controlled

2. Liquidation Value

Liquidation value is, in essence, the antithesis of going-concern value. Liquidation value
means the net amount that can be realized if the business is terminated and the assets sold off
piecemeal. The term orderly liquidation means that the assets are sold over a reasonable
period of time, attempting to get the best available price for each asset. The term forced
liquidation means that the assets are sold as quickly as possible, frequently all at one time at
an auction sale.

When computing liquidation value, it is essential to recognize all costs associated with the
liquidation of the enterprise or property. These costs normally include commissions, the
administrative cost of keeping the company alive until liquidation is completed, taxes, and
legal accounting costs.

3. Book Value
 Book value is something of a misnomer because it does not represent any standard of value at
all. It is an accounting term, not an appraisal term. Book value means the sum of the asset
accounts, net of depreciation and amortization, less the liability accounts, as shown on a
balance sheet

4. Accommodation value:
As the city or town develops, the surrounding agricultural area is to be converted into the
accommodation land. For this purpose, the owner of the land has to obtain the permission
from the competent authority to convert his agricultural land into non – agricultural or
accommodation land. Such accommodation land possesses building potential value and
hence, its value lies between the values of nearby building land and agricultural land. Thus
the accommodation value is greater than that of agriculture land and less than that of building
land.

5. Annual value: The local authority has to decide the annual value of the property so that taxes
can be calculated on that basis. Such annual value of the property has to be fixed by
observing the principles or rating valuation.
6. Book value: The book value is defined as an amount shown in the account book of a
particular year after making due provisions for the depreciation of the previous years. Thus,
the book value of a property depends on the depreciation allowed per year and it is not
affected by market conditions. In this sense, the book value represents the actual book cost.
7. Distress value: A property is said to have distress value when it can fetch lower value than
the market value. The distress value is developed due to various reasons such as:
 Fear of war, riots, earthquakes, etc.
 Financial difficulties of seller;
 Intention to favour purchaser; etc.
8. Goodwill value: This value represents the amount by which the value of a business premise
in its present form exceeds the value of physical or other assets determined at market price
9. Highest and best use value: The highest and best use value means the value resulted from
the most probable use of the property which is physically possible, approximately justified,
legally permissible and financially feasible.
10. Monopoly value: in some cases, the property possesses certain advantages with respect to the
adjoining properties due to its size, shape, frontage, location, etc. The owner of such property
may demand a fancy price for that property. Such a price is known as the monopoly value of
the property and it does not represent the market value of the property. It may also happen the
other way. The probable purchaser may be in a commanding position and he may be able to
dictate the value of property. The value offered by such a purchaser will be the monopoly
value of the property.
11. Potential value: The term potential value is used to indicate the potential possibilities of the
property when developed in its most advantageous manner. For instance, the agricultural land
on the outskirts of town possesses building potential. Similarly, an underdeveloped property
possesses potential value and it can be realized by fully developing the property.
12. Rateable value: Like an amount value, rateable value is also decided by the local authority.
This value is used for determining the tax liability.
13. Replacement value: The cost to be incurred to replace the property, either fully or in part, at
the prevailing market rates for Labour and materials, is known as the replacement value.
14. Salvage value: Some times, the property after being discarded at the end of utility period is
sold as it is without being broken into pieces and the amount realized, over and above the cost
of its removal and sale, is known as the salvage value of the property. For instance, the
sleepers used on a railway track may be reused as posts of fencing or as buffer-stops, etc.
15. Scrap value: At the end of the period of usefulness, a property is discarded and then, it can
be scraped off or broken into suitable units for disposal. The amount obtained by selling such
units is known as the scrap value of the property. For instance, a building is to be demolished
after its period of utility is over. Then some amount may be realized due to the sale of old
materials. Such an amount is known as the scrap value or junk value of the building and it is
usually about ten per cent of the original cost. Similarly, in case of equipment, machines, etc.
the broken metal will fetch some amount. It should be remembered that the materials and
equipment of special nature will have lower scrap value. For instance, the scrap value of an
R.C.C. structure will be less than a corresponding timber structure. Similarly, an asbestos
cement sheet will have lower scrap value than a corresponding corrugated galvanized iron
sheet.
16. Sentimental value: Some times, some sentiment or feeling of owner is attached to the
property and because of such sentiment; he will not be ready to part with his property even
when a fancy price is offered for the property. Such a price is known as the sentimental value
and it has no relation with the market value of nearby properties.
17. Speculative value: There are certain purchasers who are interested in purchasing the
property and then selling it with profit after short period. Such purchasers speculate on the
properties and they are interested only in earning profits from them. They are not interested in
developing the properties or for fetching more rents from the properties. The price paid by
such purchaser is the speculative value of the property. In general, the speculative value will
be less than the market value because the purchaser will try to buy the property at low price
and to sell it at high price in future.