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Posted on: 18/04/2013

Relation Of Different Value Of Same Property On Same Date

The Value of asset is generally considered to be the Market Value or the Price which in the opinion of the Valuer , it would fetch, if sold in the open marketing the valuation date. The Value is quite distinct from the Cost or the Price. The cost is factual statement of the actual expenditure incurred for producing the assets or the commodity. The Price is matter of policy, determined by adding certain permitted reward for the labour and capital of the producer of the asset to the cost and thus the price also is in the context of different purposes. There are more than 50 type of values used in the context of different purposes.

Lot of confusion is going on among the practicing Valuers related to the "Relation of Different Values on Same Property on Same Date". In the absence of guide lines available to Valuers from any banks or any financial institute or even from Income Tax Department, all Valuers are fielding in their own style or to the suitability of clients/ bankers. Therefore, following Guide Lines for Valuer for calculation of value of property has been framed to facilitate Valuers & Bank.

MARKET VALUE:

The market value of any property is the amount which can be obtained at any particular time from sale in the open market. The market value varies from time to time and depends on demand and supply. The various reasons affecting the market value of an asset are changes in the industry, recession, means of transport, cost of material, demonetisation, policy, regulatory controls on sale purchase of property, etc. The term Market Value is considered synonymous with the Fair Market Valuer the Open Market Value. The open market price means, which in the opinion of the assessing officer/Valuer would ordinarily fetch if sold in the market at the relevant date.

Even if the word Fair is not used with the market rate value, it would include the various attributes of fairness. Valuation of anything means its intrinsic worth or the qualities and usefulness inherent in it which determines its utility or worth. It is an estimate of price which ought to be or which the asset or commodity would fetch of sold in the open market. The monetary value is a market related term where there are buyers and sellers and there is a demand and supply of these goods, moveable or immovable assets or services.

As per statutory provisions in the Wealth Tax Rules 1957 as the price which in the opinion of assessing officer it would fetch if sold in open market on the valuation date.

RELISABLE VALUE / MORTGAGE VALUE

It is an estimate of mortgage loan amount that could be safely advanced by the Mortgagee (Financial Institutes or the individual) to the Mortgagor against the prime security or the collateral security offered by the mortgagor. Each financial authority has its own safety margins. To arrive at the safe mortgage value of the property, proportionate deductions are made on the market value of the security (property). This safety margin deductions varies from 15 % to 25 % of Fair Market Value.

DISTRESS VALUE:

When a property is sold at much lower price than what normally can be obtained in local market, it is called distress value. There are many reasons for resorting to the distress sale like financial crises of the vendor, area being affected by riots, communal hostilities, earthquake, floods, etc. or the land may be land-locked. Distress Value is also called Forced Sale Value.

Value of the property offered for immediate sale by the owner who is in distress is called distress sale value of the property. There is absolute urgency to liquidate asset in terms of money.

Owner may be in financial difficulty due to heavy loss in business or may have social or health problems like need of money for daughter's marriage or for family problem or for hospitalization cost for major illness or surgery. Sale of property due to communal riots is also distress sale. This value is always lower than fair market value of the property. Distress value is generally 70 % of Fair Market Value. Distress Value is generally 65% to 70% of Fair Market Value, this may be on any other account in addition to NPA.

STIGMA VALUE:

It is an estimate of the price of the property based on assumption of unwilling purchaser for such a property. Many a times it is seen that some properties though bed physical condition do not get any buyers in the market because most of the prospective buyers have stigma or disliking for the said property for certain reason. may be believed to be haunted by Ghosts. It may also be possible that murder of a popular personality might have taken place in the said house or the property and hence the stigma. Stigma could be due to belief or suspicion that the plot was used as burial ground or cremation ground in the past or that land is affected by radio activity due to past atomic reactor working on plot. Stigma normally wears out as the time passes. Some may take less time to wear out stigma some property may take little more time. There could be many more types of values such as Justified value, Economic value, Investment value, Nuisance value, Face value, Subjective value, Objective value, Sound value, Exchange value, Auction value, Realisable value, Bogus value etc.