Definition of Appraisal Terms
Unique circumstances may demand specific definitions not found below. Many terms are used to describe notions of value. The definitions offered here are to provide the fundamental concepts and are not the only acceptable definitions, since contracts may dictate a somewhat different notion. Therefore, these definitions may be expanded or redefined as the purpose and function of the appraisal may dictate as long as the fundamental concept is not altered.
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Reproduction cost new: The current cost of reproducing a new replica of a property with the same or closely similar materials.
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Replacement cost new: The current cost of a similar new property having the nearest equivalent utility as the property being appraised.
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Fair market value: The estimated amount, expressed in terms of money, that may reasonably be expected for the property in exchange between a willing buyer and 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 (In the valuation of personal property, this definition must be further defined based on the function and purpose of the appraisal.)
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Fair market value in continued use: The estimated amount, expressed in terms of money, that may reasonably be expected for a property in exchange between a willing buyer and 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.
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Fair market value—installed: The estimated amount of an installed property, expressed in terms of money, that may reasonably be expected in exchange between a willing buyer and seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts.
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Fair market value—removal: The estimated amount, expressed in terms of money, that may reasonably be expected for a property between a willing buyer and 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, considering removal of the property to another location.
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Liquidation value in place: The estimated gross amount, expressed in terms of money, that is projected to be obtainable from a failed facility, assuming that the entire facility would be sold intact, as of a specific date, within a limited time to complete the sale.
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Orderly liquidation value: The estimated gross amount, expressed in terms of money, that could be typically realized from a sale, as of a specific date, given a reasonable period to find a purchaser(s), with the seller being compelled to sell on an as-is/where-is basis.
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Forced liquidation value: The estimated gross amount, expressed in terms of money, that could be typically realized from a properly advertised and conducted public sale, with the seller being compelled to sell, as of a specific date, with a sense of immediacy on an as-is/where-is basis.
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Salvage value: The estimated amount, expressed in terms of money, that may be expected for the whole property or a component of the whole property that is retired from service for use elsewhere.
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Scrap value: The estimated amount, expressed in terms of money, that could be realized for the property, as of a specific date, if it were sold for its material content not for a productive use.
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Insurance replacement cost: The replacement cost new as of a specific date, as defined in the insurance policy less the cost new of the items specifically excluded in the policy, if any.
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Insurance value depreciated: The insurance replacement cost, as of a specific date, less accrued depreciation considered for insurance purposes.