Certified Residential Appraiser Practice Exam

What does Use Value refer to?

1. The market value of a property

2. The original purchase price

3. Value as currently used or designed

4. Potential future value

The correct answer is: Value as currently used or designed

Use Value pertains to the specific value that a property holds based on its current use or design rather than its market value or historical purchase price. This concept considers how a property is being utilized at the moment, reflecting the property's worth as it serves its specific function. For instance, an agricultural property may hold significant use value when assessed in relation to its capacity for farming, but this use value might differ significantly from its market value, which could be influenced by speculative factors, location, or zoning changes. Use Value is particularly relevant in assessments where the functional or economic purpose of the property is central to determining its value. It can differ from potential future value, which considers what the property might be worth if it were to be repurposed or undergo changes in market conditions. Therefore, understanding use value is crucial for appraisers when they assess properties that are not just being valued for sale but for their existing applications and benefits to the user.