What is Valuation? Market Value, What Does Investment Value Mean?

In addition, in the analysis of base value (muhammen value) in auctions, real estate market studies, feasibility analysis of a project on a real estate, the highest and best use value of the property analysis, inheritance sharing, expropriation, etc. needs valuation in transactions. In purchasing, selling, leasing and revaluation of real estate included in the portfolios of Real Estate Investment Partners (REIT), determining compliance with legal procedures at the beginning of the project, shares in the case of purchases and sales of real estate exceeding 5% of the paid capital of all companies traded on the stock exchange, and if they put their own real estate in another company as the equivalent capital, banks CMB Licensed Valuation procedures are needed for valuation of those whose receivables exceeded TL 2.000 TL.

What Does Market Value (Reasonable Value, Market Value) Mean?

Market value or Market value means the same thing. International accounting standards name this value as reasonable value. In market conditions between a willing buyer and a willing seller for a real estate at the valuation date, the parties have sufficient knowledge and consideration against each other, any pressure is the estimated price for the purchase and sale that it can carry out without. Here the reasonable marketing period during which the property will stand on the market is usually up to 12 months.

What Does Level Liquidity Value (Disposal Value, Emergency Selling Value) Mean?

As a result of negotiations and negotiations between the parties, the most probable cash sales value determined for the assets, reasonable and in the near term, is defined as the regular liquidity value. In this sale, the time pressure is felt moderately, and the pressure to dispose of the property is more than it is worth. Usually, in regular liquidity, the time of sale of the property is projected between 3-6 months, and the sales value is determined by discounting it according to it.

What Does Mandatory Liquidity Value (Liquidation Value) Mean?

Considering economic trends and mandatory sales conditions, including publicly held auctions, the most likely cash sales value determined for real estate is to be obtained is the valuation made so that the assets can be sold in a process such as 0-3 months. In this type of valuation, serious discounts can be raised, since the opinion on the value created is aimed at selling the property as soon as possible. But here the liquidity of the property is also important. For example, the difference between compulsory liquidity and market value of a property that is easy to sell under any type of market conditions is not very sharp. On the other hand, if the property is a very specific product (such as a factory that may be subject to technological age-old), the differences between mandatory liquidity and market value can even go up to 50%. Elements such as the experience, vision and personal opinion of appraisers play an important role in this value appreciation.

What Does Investment Value Mean?

Depending on individual investment conditions, the specific value of a property for a particular investor or group of investors is the “investment value”. This value is different from the market value. It indicates the value for a particular person and is a value that arises from spiritual or physical need. Suppose I have a factory and need to grow. The land right next to my property is more precious to me as I intend to expand my factory. I can afford to pay a different value for that area than the others and the market. But the name of this value that I pay is not “market value”, but “investment value”, it is also above the market value.

What Does Current Use Value Mean?

The value for the use of a property in the case of its presence is defined as the “current use value”. For example, if a factory that has been changed is still operational, but the value is requested with its current state, this value is the current use value.

You can find our previous post at https://www.endeksa.com/tr/blog/yazi/emlak-vergisi-ile-ilgili-bilmeniz-gerekenler link.

*EVA Real Estate Valuation Consultancy has been prepared with contributions.