When appraising subject assets, three traditional valuation methodologies are considered: the Cost Approach, the Sales Comparison Approach, and the Income Approach. One or more of these approaches are utilized depending on the type of property, the intended use of the appraisal, the identified scope of work, and the quantity and quality of data available for our analysis.
The Cost Approach considers the current cost of reproducing or replacing an asset new (including assemblage), less depreciation from physical deterioration, functional obsolescence, and economic obsolescence.
Sales Comparison Approach
The Sales Comparison Approach compares similar individual assets or whole plants that have sold, or are currently offered for sale, in the same marketplace as the subject. Within these comparables may exist pertinent factors of comparison which include, where applicable, manufacturer, size, capacity, condition, quality, age, modifications, location, and date of sale. These factors may be considered in arriving at opinions of value for the subject assets.
The Income Approach estimates the present value of the anticipated future benefits associated with ownership. The net income, or net cash flow, is estimated over an appropriate period of time and then discounted or capitalized at an appropriate rate. This rate reflects the time value of money, inflation, and risk inherent in ownership of the property.
The Cost, Sales Comparison, and Income Approaches offer a range of value for the subject property under analysis. The relative merits of each approach are discussed in depth in our reports, which are prepared in conformance with the Uniform Standards of Appraisal Practice (USPAP).
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Each organization has distinctive business issues, thereby ensuring that each engagement is unique. ValSpan, Inc. provides valuation and consulting services for a variety of purposes under several value standards. We have an understanding of our clients’ needs and the situations in which those standards may apply. The following list presents the most common value standards we employ:
- Market Value
- Market Value in Use
- Fair Market Value
- Fair Value
- Orderly Liquidation Value
- Forced Liquidation Value
- Replacement Cost
- Replacement Cost New Less Depreciation
It is important to note that each state or jurisdiction has its own Market Value definition which we ensure comports with the value standard required by the engagement.