— Glossary

Valuation glossary, A to Z

Unlike a general dictionary, this glossary defines only the terms used in valuation practice, as they are defined or used in the standards covered on Valuvix: IVS 2025, the RICS Red Book, and TEGOVA’s EVS 2025, EVS-BV 2026, EVS-IA 2026 and EVS-PME 2022. Terms run from A to Z for quick reference. Each definition is a plain-language summary, followed by the standards that define the term; always rely on the official text.

Jump to: A–C · D–H · I–L · M–R · S–W

■ Glossary · A – C

A

Adjustment — A modification to observed or derived inputs to reflect functional, economic, legal or regulatory differences between the subject asset and the evidence. (EVS-IA 2026)

Alternative use value — The value of an asset under a use other than its present one. (EVS 2025 · EVS-PME 2022)

Asset — A right to an economic benefit. (IVS 2025)

Asset-based approach — An approach that indicates the value of a business or business interest from the value of its assets net of its liabilities. (EVS-BV 2026)

Assumption — A supposition accepted as true for the valuation without verification by the valuer, covering facts or conditions that affect the subject or the approach, as agreed in the instructions. (RICS Red Book · EVS 2025 · EVS-BV 2026)

Automated valuation model (AVM) — A model that calculates a value for a specified asset at a specified date by algorithm, without the valuer exercising professional judgement over its inputs or outputs. (IVS 2025)

B

Basis of value — The fundamental premises on which a reported value is based, such as market value, market rent, investment value or equitable value. It is distinct from the methods used to measure it. (IVS 2025 · RICS Red Book · EVS 2025 · EVS-BV 2026)

Beta — A measure of how the returns on a security move relative to a broad market index, used in estimating the cost of equity. (EVS-BV 2026)

Business — An integrated set of activities and assets conducted and managed to provide goods or services, or to generate investment or other income. (EVS-BV 2026)

C

Client — The party that engages the valuer. A client may be internal, such as an employer, or external. (IVS 2025)

Comparable — An asset or transaction judged by the valuer to be similar enough to the subject to provide evidence of value. For intangibles, comparability should be functional, economic, legal and territorial. (EVS 2025 · EVS-IA 2026)

Comparable publicly traded companies method — A market method that uses share prices of listed companies comparable to the business being valued. (EVS-BV 2026)

Comparable transactions method — A market method that uses prices in sales, mergers or acquisitions of comparable businesses or business interests. (EVS-BV 2026)

Contributory asset charge (CAC) — The return attributed to the tangible, intangible and financial assets that support an intangible asset, deducted in income methods to isolate the earnings of that asset. (EVS-IA 2026)

Control premium — An increase over a non-controlling value that reflects the rights and powers associated with control. (EVS-BV 2026)

Cost — The consideration or expenditure required to acquire or create an asset. (IVS 2025)

Cost approach — An approach based on the principle that a buyer will pay no more for an asset than the cost of obtaining one of equal utility, by purchase or construction. (IVS 2025 · RICS Red Book · EVS 2025 · EVS-PME 2022)

CUT method — Comparable uncontrolled transaction method: a market method that relies on prices or royalty terms observed in comparable arm’s-length licences or transfers. (EVS-IA 2026)

■ Glossary · D – H

D

Data — Quantitative and qualitative information available to the valuer. (IVS 2025)

Date of inspection — The date on which the inspection took place. (EVS 2025)

Date of report — The date on which the valuer signs the report. (RICS Red Book · EVS 2025)

Departure — A permitted deviation from a specific provision of the standards, made where mandatory application would be inappropriate or impractical, and disclosed in the report. (RICS Red Book · EVS 2025)

Depreciated replacement cost (DRC) — The current cost of replacing an asset with its modern equivalent, less deductions for physical deterioration and all relevant forms of obsolescence and optimisation. (RICS Red Book)

Depreciation — The loss in value of an asset, from any cause, compared with its current cost new. (EVS-PME 2022)

Development property — Land or buildings under construction, reconstruction or refurbishment, or suitable for such works in the immediate future. (EVS 2025)

Direct capitalisation method — A method that measures value by dividing a single period’s net income by a capitalisation rate. (EVS-PME 2022)

Discount for lack of control (DLOC) — A reduction to the value of a non-controlling interest reflecting the absence of control rights. Also known as a minority discount. (EVS-BV 2026)

Discount for lack of marketability (DLOM) — A reduction reflecting limits on how readily an interest can be sold or converted into cash, including the time and cost of a sale. (EVS-BV 2026)

Discount rate — A rate of return used to convert a future monetary sum into a present value. (IVS 2025 · EVS-BV 2026)

Discounted cash flow (DCF) — A method that values an asset from expected future cash flows over a forecast period, plus a terminal value, discounted to the present. (EVS-BV 2026 · EVS-PME 2022)

E

Economic life — The period over which an asset is expected to generate economic benefits. It may be shorter than its legal or physical life. (EVS-IA 2026 · EVS-PME 2022)

Economic (external) obsolescence — A loss in value caused by factors outside the asset, such as market conditions, demand or regulation. (EVS-PME 2022)

Effective age — The age indicated by an asset’s condition when compared with a new equivalent. (EVS-PME 2022)

Enterprise value — The value of a company’s equity plus interest-bearing debt, less excess cash and cash equivalents. (EVS-BV 2026)

Equitable value — The estimated price for the transfer of an asset or liability between identified, knowledgeable and willing parties that reflects their respective interests. (IVS 2025 · RICS Red Book · EVS-BV 2026)

Equity risk premium (ERP) — The additional return investors require for holding equities rather than risk-free assets. (EVS-BV 2026)

ESG — Environmental, social and governance criteria used to assess the impact of sustainability, ethical practices, financial performance or operations of a company, asset or liability. (IVS 2025 · RICS Red Book)

Excess land — Land within a property that is not essential to the operational use of its buildings. Also called surplus land. (EVS 2025)

External valuer — A valuer who, with any associates, has no material links with the client, an agent acting for the client, or the subject of the assignment. (RICS Red Book)

F

Fair value (accounting) — The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (IFRS 13). (RICS Red Book · EVS 2025 · EVS-BV 2026 · EVS-PME 2022)

Fair value (general) — A price between identified, fully informed willing parties acting according to their own objectives; TEGOVA’s definition for non-accounting purposes. (EVS 2025 · EVS-PME 2022)

Forced sale value — The amount obtainable where the seller is under constraints that prevent a sale meeting the definition of market value. (EVS 2025 · EVS-PME 2022)

Free cash flow to equity (FCFE) — Cash available to shareholders after operating costs, reinvestment and debt obligations; used to value equity. (EVS-BV 2026)

Free cash flow to the firm (FCFF) — Operating cash flow after working capital needs and capital expenditure, available to all providers of capital; used to value the enterprise. (EVS-BV 2026)

Functional obsolescence — A loss in value from reduced efficiency or utility compared with a modern equivalent. (EVS-PME 2022)

G

Going concern — The premise that a business will continue to operate, using its assets to generate income. (EVS-BV 2026 · EVS-PME 2022)

Goodwill — The future economic benefit of a business or group of assets that is not separable; the residual value that cannot be allocated to identifiable assets. (RICS Red Book · EVS-IA 2026)

Gross development value — The expected end value of a completed development, used in the residual method. (EVS 2025)

H

Highest and best use — The use of an asset that is physically possible, reasonably probable, legal or likely to become so, and that gives the highest value at the valuation date. (EVS 2025 · EVS-BV 2026 · EVS-PME 2022)

Historical cost — The cost of an asset when it was first placed in service new. (EVS-PME 2022)

■ Glossary · I – L

I

Identifiable — The quality of an intangible asset whose benefits, rights and dependencies can be delineated, measured and transferred or licensed independently of other assets. (EVS-IA 2026)

Income approach — An approach that converts expected future cash flows or income into a single present value. (IVS 2025 · RICS Red Book · EVS 2025 · EVS-PME 2022)

Income capitalisation method — A method that converts a representative level of income into value using a capitalisation rate or an income multiple. (EVS-BV 2026)

Input — Data, assumptions and adjustments selected by the valuer through professional judgement for use in a valuation. (IVS 2025)

Inspection — A visit to a property, or examination of an asset, to obtain the information needed to express an opinion of its value. (RICS Red Book)

Insurable value — The cost of replacing damaged property with materials of like kind and quality, with or without a deduction for depreciation depending on the policy. (EVS 2025 · EVS-PME 2022)

Intangible asset — An identifiable non-monetary asset without physical substance that grants rights or economic benefits to its owner. (IVS 2025 · RICS Red Book · EVS-IA 2026)

Intellectual property (IP) — A legally protected intangible asset arising from statutory or regulatory rights, such as patents, trade marks, designs, copyrights and trade secrets. (EVS-IA 2026)

Intended use — The reason for which a value is developed, as set out in the scope of work. Also called intended purpose. (IVS 2025)

Intended user — Any party identified by the client and valuer in the scope of work as a user of the valuation. (IVS 2025)

Internal valuer — A valuer employed by the enterprise that owns the assets, or by the accounting firm that prepares its financial records. (RICS Red Book)

Investment value — The value of an asset to a particular owner or prospective owner given their individual investment or operational objectives. Also called worth. (IVS 2025 · RICS Red Book · EVS 2025 · EVS-BV 2026)

J

Jurisdiction — The legal and regulatory environment in which a valuation is performed. (IVS 2025)

L

Legal life — The period for which statutory or regulatory protection of an intangible asset applies. (EVS-IA 2026)

Liability — A present obligation to transfer an economic benefit. (IVS 2025)

Liquidation value — The amount realised when an asset or group of assets is sold in a liquidation, under either an orderly or a forced premise. (IVS 2025 · EVS-BV 2026 · EVS-PME 2022)

Liquidity — The ability to convert an asset or interest into cash quickly without significant loss of value. (EVS-BV 2026)

■ Glossary · M – R

M

Market approach — An approach that compares the subject with identical or similar assets for which price information is available. (IVS 2025 · RICS Red Book · EVS 2025 · EVS-PME 2022)

Market participant assumptions — Assumptions that reflect the expectations and decision criteria of typical buyers and sellers in the relevant market. (EVS-IA 2026)

Market rent — The estimated amount for which an interest in real property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate terms, at arm’s length, after proper marketing, with both acting knowledgeably, prudently and without compulsion. (IVS 2025 · RICS Red Book · EVS 2025)

Market value — The estimated amount for which an asset or liability would exchange on the valuation date between a willing buyer and a willing seller at arm’s length, after proper marketing, with both acting knowledgeably, prudently and without compulsion. (IVS 2025 · RICS Red Book · EVS 2025 · EVS-BV 2026 · EVS-PME 2022)

Marriage value — See synergistic value. (RICS Red Book · EVS 2025)

Modern equivalent asset (MEA) — An asset that provides the same utility as the subject using modern technology or processes. (EVS-IA 2026)

Mortgage lending value — A value based on a prudent assessment of the future marketability of a property, considering its long-term sustainable aspects, normal local market conditions and its current and suitable alternative uses. (EVS 2025)

Multi-period excess earnings method (MPEEM) — An income method that isolates the earnings of an intangible asset after deducting contributory asset charges. (EVS-IA 2026)

N

Net assets method — A method that determines equity value as adjusted assets less adjusted liabilities; common for asset-holding companies. (EVS-BV 2026)

Non-operating assets — Assets surplus to the core business, normally valued separately. (EVS-BV 2026)

O

Observable data — Information readily available to market participants about actual events or transactions that is used in determining value. (IVS 2025)

Obsolescence — A loss in utility caused by technological, regulatory, market or functional change. (EVS-IA 2026 · EVS-PME 2022)

Orderly liquidation value — A liquidation value that assumes appropriate marketing time and typical sale processes. (EVS-BV 2026)

P

Physical life — The time an asset could be used before it wears out or cannot be repaired economically, assuming routine maintenance. (EVS-PME 2022)

Plant and equipment — Plant, machinery, equipment and dedicated infrastructure used in an enterprise’s industrial or commercial processes. (RICS Red Book · EVS-PME 2022)

Price — The consideration asked, offered or paid for an asset. Price and value may differ. (IVS 2025 · EVS 2025)

Professional judgement — The use of accumulated knowledge, experience and critical reasoning to make an informed decision. (IVS 2025)

Professional scepticism — An attitude that includes a questioning mind and critical assessment of valuation evidence. (IVS 2025)

Purpose of valuation — The reason a valuation is performed; broadly equivalent to intended use under IVS. (RICS Red Book)

R

Real estate — Land and everything that is a natural part of it or attached to it, including buildings, site improvements and permanent building attachments. (RICS Red Book)

Relief-from-royalty method (RfR) — An income method that values an intangible asset from the royalty payments avoided by owning it rather than licensing it. (EVS-IA 2026)

Remaining useful life — Useful life less the asset’s age, adjusted for refurbishment or other factors that changed its operating life. (EVS-PME 2022)

Replacement cost — The cost of obtaining an asset of equivalent utility using current materials and technology. (EVS-IA 2026 · EVS-PME 2022)

Reproduction cost — The cost of creating an exact replica of an asset using the same or closely similar materials and methods. (EVS-IA 2026 · EVS-PME 2022)

Residual value — The amount expected from disposal of an asset at the end of its useful life, after deducting disposal costs. (EVS 2025 · EVS-PME 2022)

Responsible valuer — The named, appropriately qualified valuer who accepts responsibility for the valuation. (RICS Red Book)

Risk-free rate — The return available on an investment free of default risk. (EVS-BV 2026)

Royalty rate — A percentage or unit charge paid for the licensed use of an intangible asset. (EVS-IA 2026)

■ Glossary · S – W

S

Salvage value — The value of an asset, or its parts, disposed of for an alternative use or as spares. (EVS-PME 2022)

Scope of work — Written confirmation of the conditions agreed for undertaking and reporting a valuation. Also called terms of engagement. (IVS 2025 · RICS Red Book · EVS 2025 · EVS-BV 2026)

Scrap value — The value of an asset for the materials it contains once it is no longer usable. (EVS-PME 2022)

Significant — Any aspect of a valuation that, in the valuer’s professional judgement, greatly affects the value. (IVS 2025)

Special assumption — An assumption of facts that differ from those existing at the valuation date, or that a typical market participant would not make. Also called a hypothetical condition. (RICS Red Book · EVS 2025 · EVS-BV 2026)

Special purchaser — A buyer for whom an asset has special value because of advantages that would not be available to other buyers. (RICS Red Book · EVS-PME 2022)

Special value — An amount that reflects attributes of an asset that are of value only to a special purchaser. (RICS Red Book · EVS-PME 2022)

Specialised property — Property rarely, if ever, sold except as part of the business it serves, because of its specialised nature, design, size or location. (RICS Red Book)

Specialist — An individual or group with the technical skills, experience and knowledge to perform or assist in a valuation or its review. (IVS 2025)

Sustainability — Carrying out activities without depleting resources or causing harmful impacts; ESG is the framework used to assess it. (RICS Red Book)

Synergistic value — The additional value created when assets or interests are worth more combined than the sum of their separate values. Also called marriage value. (IVS 2025 · RICS Red Book · EVS 2025 · EVS-BV 2026 · EVS-PME 2022)

Systematic risk — Market-wide risk that cannot be removed by diversification. (EVS-BV 2026)

T

Tangible asset — A physical, measurable asset such as property, plant and equipment. (IVS 2025)

Terminal value — The value at the end of the explicit forecast or holding period. (EVS-BV 2026 · EVS-PME 2022)

Trade related property — Property designed or adapted for a specific type of business, whose value reflects its trading potential. (RICS Red Book)

Trending method — A method that estimates reproduction cost new by applying an index to an asset’s historical cost. (EVS-PME 2022)

U

Unsystematic risk — Risk specific to an individual security that can be removed by diversification. (EVS-BV 2026)

Useful life — The period over which an asset is expected to be used or to generate benefits; it may differ from its legal life or accounting amortisation period. (EVS-IA 2026 · EVS-PME 2022)

V

Valuation — The act or process of forming a conclusion on value as of a valuation date. The Red Book describes it as an opinion of value on a stated basis at a specified date. (IVS 2025 · RICS Red Book)

Valuation approach — A generic term for the market, income or cost approach. (IVS 2025 · EVS 2025 · EVS-BV 2026)

Valuation date — The point in time to which the value applies, including the time of day where value can change materially within a day. (IVS 2025 · RICS Red Book · EVS 2025)

Valuation method — A specific technique within an approach used to reach a value. (IVS 2025 · EVS 2025 · EVS-BV 2026)

Valuation model — A quantitative implementation of a method that converts inputs into outputs used to develop a value. (IVS 2025 · RICS Red Book)

Valuation report — A document setting out the scope, key assumptions, methods and conclusions of an assignment, with an opinion of value on a recognised basis. (EVS 2025 · EVS-BV 2026)

Valuation review — A valuation process review, a value review, or both. A review is not in itself a valuation. (IVS 2025 · RICS Red Book)

Valuation risk — The possibility that a value is not appropriate for its intended use. (IVS 2025)

Valuation uncertainty — Uncertainty about the reliability of a result arising from the quality of evidence, model dependence and market conditions. (EVS-BV 2026)

Value — The valuer’s quantitative conclusion from a valuation process that complies with IVS as of a valuation date. (IVS 2025)

Value driver — A factor that influences value but is not itself an identifiable intangible asset, such as network effects. (EVS-IA 2026)

Valuer — An individual or group with the qualifications, ability and experience to value objectively, ethically and competently, whether employed internally or engaged externally. (IVS 2025)

W

Weight — The reliance placed on a particular indication of value in reaching a conclusion. (IVS 2025)

Weighted average cost of capital (WACC) — The market-value-weighted average of the cost of equity and the cost of debt; the discount rate for cash flows to all capital providers. (EVS-BV 2026)

Worth — See investment value. (RICS Red Book)