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2. Market value is described,not defined,in the • If the appraisal is conditioned upon Uniform Standards of Professional Appraisal financing or other terms, specification Practice (USPAP) as follows: A type of value, as to whether the financing or terms are stated as an opinion, that presumes the at, below, or above market interest transfer of a property (i.e., a right of rates and/or contain unusual conditions ownership or a bundle of such rights),as of a or incentives. The terms of above- or certain date, under specific conditions set below-market interest rates and/or forth in the definition of the term identified other special incentives must be clearly by the appraiser as applicable in an appraisal. set forth; their contribution to, or Comment: Forming an opinion of market negative influence on, value must be value is the purpose of many real property described and estimated; and the appraisal assignments, particularly when the market data supporting the opinion of client's intended use includes more than one value must be described and explained. intended user. The conditions included in market value definitions establish market 3. The following definition of market value is perspectives for development of the opinion. used by agencies that regulate federally These conditions may vary from definition to insured financial institutions in the United definition but generally fall into three States: The most probable price that a categories: property should bring in a competitive and a. the relationship, knowledge, and open market under all conditions requisite to motivation of the parties(i.e.,seller and a fair sale, the buyer and the seller each buyer); acting prudently and knowledgeably, and b. the terms of sale (e.g., cash, cash assuming the price is not affected by undue equivalent,or other terms);and stimulus. Implicit in this definition is the c. the conditions of sale (e.g., exposure in consummation of a sale as of a specified date a competitive market for a reasonable and the passing of title from seller to buyer time prior to sale). under conditions whereby: • Buyer and seller are typically motivated; Appraisers are cautioned to identify the • Both parties are well informed or well exact definition of market value, and its advised, and acting in what they authority, applicable in each appraisal consider their best interests; completed for the purpose of market value. • A reasonable time is allowed for (USPAP,2016-2017 ed.) exposure in the open market; USPAP also requires that certain items be • Payment is made in terms of cash in U.S. dollars or in terms of financial included in every appraisal report. Among arrangements comparable thereto; and these items, the following are directly . The price represents the normal related to the definition of market value: consideration for the property sold • Identification of the specific property unaffected by special or creative rights to be appraised. financing or sales concessions granted • Statement of the effective date of the by anyone associated with the sale. value opinion. (12 C.F.R. Part 34.42(g); 55 Federal • Specification as to whether cash, terms Register 34696, August 24, 1990, as equivalent to cash, or other precisely amended at 57 Federal Register 12202, described financing terms are assumed April 9, 1992;59 Federal Register 29499, as the basis of the appraisal. June 7, 1994) 119