Market Value:  The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

  1. Buyer and seller are typically motivated
  2. Both parties are well informed or well advised, and each acting in what he considers his own best interests;
  3. A reasonable time is allowed for exposure in the open market; payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and,
  4. 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.1

Fee Simple Interest:  Absolute ownership unencumbered by any other interest or estate; subject only to the limitations of eminent domain, escheat, police power, and taxation.2

Leased Fee Estate:  An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor and the leased fee are specified by contract terms contained within the lease.2

Leasehold Estate:  The right held by the lessee through a lease conveying the rights of use and occupancy for a stated term under certain conditions.2

Arms Length Transaction:  An arms length transaction is one in which both the seller and the purchaser act completely independently of each other and have no connection or relationship to each other.

Highest and Best Use:  That reasonably probable and legal use of vacant and or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability.2

 1  Uniform Standards of Professional Appraisal Practice, Page 160

     Federal Reserve System, 12 CFR Parts 208 and 225, Sec 225.62
     Office of the Comptroller of the Currency, 12 CFR Part 34
     Federal Deposit Insurance Corporation, 12 CFR part 323, Sec. 323.2
     Office of Thrift Supervision, 12 CFR Part 564, Sec 564.2
     NCUA, 12 CFR Part 722, Sec 722.2 

 2  The Dictionary of Real Estate Appraisal—Third Edition, Appraisal Institute, 1993