Below is a list of definitions of the various appraisal value types used.
FAIR MARKET VALUE
Fair Market Value (FMV) – (middle “secondary Market” value, usually for IRS purposes) Appraised "Fair Market Value" is the IRS definition as stated in the Treasury Regulation Sections 1.170A-1 (c) (2) is "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts." (According to Technical Advisory Memorandum 9235005 [May 27, 1992], fair market value should include the buyer's premium.)The fair market value of a particular item of property includible in the decedent’s gross estate is not to be determined by a forced sale price.Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate.Thus, in the case of an item of property includible in the decedent’s gross estate, which is generally obtained by the public in the retail market, the fair market value of such an item of property is the price at which the item or a comparable item would be sold at retail. Source: Treasury Regulations Section 20.2031-1 (b)
Used For: • Donation (IRS) • Estate Tax (IRS) • Estate Distribution
FORCED LIQUIDATION VALUE
Forced Liquidation Value (FLV) is defined as the net price in terms of cash, or other precisely revealed terms, for which the property would change hands if sold immediately, without regard to relevant market place and appropriate use. In certain cases, this may be a negative value as labor and other costs may be required to disassemble and dispose of the property in a quickly and expedient manner.
Source: Appraisers Association of America - 2019 Definitions of Value, p.1 Used For: • Forced Sale Purposes
MARKETABLE CASH VALUE
Marketable Cash Value (MCV) is defined as the net value a willing seller realizes after disposing of property in a competitive and open market to a willing buyer. Both the buyer and seller must be reasonably knowledgeable of all relevant facts, and neither being under constraint to buy or sell. Marketable cash value takes into consideration insurance, dealer commissions, advertising, travel, and shipping expenses that may be involved in the sale.
Source: Appraisers Association of America - 2019 Definitions of Value, p.1 Used For: • Divorce • Estate Distribution • Estate Planning Purposes
ORDERLY LIQUIDATION VALUE
Orderly Liquidation Value (OLV) is defined as "the most probable price in terms of cash, or other precisely revealed terms, for which the property would change hands under required and limiting conditions in an orderly manner, generally advertised, with reasonable time constraints, in an appropriate and relevant marketplace, with knowledgeable buyers.” Source: ASA 1994 Handbook, P.2
Used For: • Quick Sale Purposes
RETAIL REPLACEMENT VALUE
Retail Replacement Value (RRV) is defined as the highest amount in terms of US dollars that would be required to replace a property with another of similar age, quality, origin, appearance, provenance, and condition within a reasonable length of time in an appropriate and relevant market. When applicable, sales and/or import tax, commissions, advisement fees, and/or premiums are included in this amount.
Source: Appraisers Association of America - 2019 Definitions of Value, p.2 Used For: • Obtaining Insurance Coverage