Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
“The estimated amount…” refers to a price payable for the property in an arm’s-length market transaction. It is the best price reasonably obtainable by the seller and the most advantageous price reasonably obtainable by the buyer and specifically excludes an estimated price inflated or deflated by special terms.
“…a property should exchange…” refers to the fact that the value of a property is an estimated amount at which the market expects a transaction to be completed.
“…on the date of valuation…” requires that the estimated Market Value is time-specific since markets and market conditions may change and the estimated value may be inappropriate at another time.
“…between a willing buyer…” refers to one who is motivated, but not compelled to buy. This buyer is neither over-eager nor determined to buy at any price. The assumed buyer would not pay a higher price than the market requires.
“…a willing seller…” is neither an over-eager nor a forced seller, prepared to sell at any price. The willing seller is motivated to sell the property at market terms for the best price attainable in the (open) market after proper marketing.
“…in an arm’s-length transaction…” is one between parties who do not have a particular or special relationship that may make the price level uncharacteristic of the market or inflated because of an element of Special Value.
“…after proper marketing…” means that the property would be exposed to the market for a sufficient period of time, in the most appropriate manner and at the best price reasonably obtainable.
“…wherein the parties had each acted knowledgeably and prudently…” presumes that both the willing buyer and the willing seller are reasonably informed about the nature and characteristics of the property, its actual and potential uses, the state of the market, and prudently seek the best price for their respective positions in the transaction.
“…and without compulsion…” establishes that neither party is forced or unduly coerced to complete the transaction.
The full version of the definition of Market Value is obtainable upon request.
Forced Sale Value
“Forced Sale Value” is the amount that may reasonably be received from the sale of a property under forced sale conditions that do not meet all the criteria of a normal market transaction. It is a price which arises from disposition under extraordinary or atypical circumstances, usually reflecting an inadequate marketing period without reasonable publicity.
Forced Sale is an inappropriate mode of sale reflecting an unwilling seller condition, and/or disposal under compulsion or duress.
The recommended Forced Sale Value is arrived based on the assumptions that the disposal of the property is completed in a manner reflecting the position of an unwilling seller under conditions of compulsion or duress without an adequate period of marketing for the sale of such property.
Fire Insurance Value
Fire Insurance Value is the recommended sum as current equivalent reinstatement cost of a similar new building including costs of demolition and debris clearance plus the professional fees.
Market Rental Value
The term “Market Rental Value” is intended to mean the best monthly rent at which the subject property might reasonably be expected to be let in the open market at a particular time with the tenant undertaking to pay all costs for utilities and public services which result from the occupation and the landlord undertakes to bear the usual outgoings, such as assessment, quit rent, external repairs and other statutory taxes which are necessary to maintain the subject property in a fair and tenantable state.
Reserve Price is the minimum price at which a property will be sold at a Public Auction. Relevant Sections of the National Land Code (Act 56 of 1965) state that the Reserve Price is equal to the estimated Market Value of the property in question.