Liquidation value
From Wikipedia, the free encyclopedia
Liquidation value may be either the result of a forced liquidation or an orderly liquidation. Either value assumes that the sale is consummated by a seller who is compelled to sell and assumes an exposure period which is less than market normal.
The most common definition used by real estate appraisers is as follows[1]
The most probable price that a specified interest in real property is likely to bring under all of the following conditions:
- Consummation of a sale will occur within a severely limited future marketing period specified by the client.
- The actual market conditions currently prevailing are those to which the appraised property interest is subject.
- The buyer is acting prudently and knowledgeably.
- The seller is under extreme compulsion to sell.
- The buyer is typically motivated.
- The buyer is acting in what he or she considers his or her best interest.
- A limited marketing effort and time will be allowed for the completion of a sale.
- Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto.
- The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Note that this definition differs from the most commonly used definitions of market value or fair market value.
[edit] References
- ^ Dictionary of Real Estate Appraisal, 4th ed., Appraisal Institute, 2002
