Property Valuation
What is 'value in use' versus 'value in exchange' in real estate valuation?
AA. They are identical concepts used in different valuation approaches
BB. Value in use is the worth of a property to a specific user for their specific use; value in exchange (market value) is the most probable price in an arm's length transaction between typical parties✓ Correct
CC. Value in use is always higher than market value for owner-occupied properties
DD. Value in exchange only applies to commercial properties in Hawaii
Explanation
Value in use reflects the value to a specific user for their particular purpose—a special use building (hospital, church) may have higher value in use to its occupant than market value would suggest. Value in exchange (market value) is the most probable price between willing, knowledgeable parties in a competitive market, which is the standard used in most real estate appraisals.
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