From a practical point of view, the appraisal process can be viewed as no more than answering a question: “What is the value?” Before this question can be answered, however, a definition of value is required. Defining the term value begins with identifying the standard of value, that is, the type of value being sought. Each standard of value contains numerous assumptions that represent the underpinnings of the type of value being utilized in a specific engagement.

Even when a standard of value is specified, there is no guarantee that all would agree on the underlying assumptions of that standard. As James C. Bonbright wrote in his pioneering book, Valuation of Property:

When one reads the conventional value definitions critically, one finds, in the first place, that they themselves contain serious ambiguities, and in the second place, that they invoke concepts of value acceptable only for certain purposes and quite unacceptable for other purposes.1

It has been our observation that Bonbright's 1937 quote still applies today. This book is an attempt to address some of the ambiguities inherent in the application of common standards of value. It has been written by valuation practitioners who deal with these issues on a daily basis. Since we are not attorneys, the book is not written to provide legal advice but rather to discuss the interaction between valuation theory and its judicial and regulatory application.

In this book, we address the standard of value ...

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