In our first perspectives paper, Challenges to Market Value, the IVSC Tangible Assets Board (TAB) explored a number of topics pertaining to Market Value, which is one of the most common basis of value used in valuations. Topics discussed included: Price versus value, relating various forms of market evidence to a basis of value, the availability of market information in a pandemic world, prudential value and its comparison to Market Value, and value in volatile listed markets.
A broad range of feedback was received in relation to this paper. The overarching feedback from valuation professionals is that whilst the Market Value basis of value is generally sound from a valuers’ perspective, the concept is frequently misunderstood and misinterpreted by a range of valuation stakeholders, as outlined in the first Perspective Paper in this series. This second Perspective Paper seeks to further explore this topic and feedback in more detail, including discussions on:
- Price, Cost, Value and Worth
- How do we define what the ‘market’ is and how does this impact on Market Value?
- What is the Market Value conceptual framework?
- Is market Value backward looking?
- Are the ‘peaks’ and ‘troughs’ truly captured when using a Market Value premise?
- How does the valuer utilise assumptions and special assumptions with Market Value?