Certified Pennsylvania Evaluator Practice Exam

What does "value in use" refer to?

1. The resale value of a property in the market

2. The fortune a property generates for its owner

3. The worth of an economic good to its owner considering productivity

4. The assessed value determined by the local government

The correct answer is: The worth of an economic good to its owner considering productivity

"Value in use" refers to the specific worth of an economic good to its owner, taking into account how effectively that good contributes to the owner's productivity and utility. This concept is particularly important in property evaluation as it emphasizes not just the market value or potential resale price, but rather how the property is utilized by the owner and the benefits it provides in terms of income generation or utility. Evaluators consider factors such as the operational efficiency and the unique circumstances of the owner, which may not reflect in market-based valuations. Understanding this helps clarify the importance of distinguishing between market value and value in use, as the former may fluctuate based on market conditions, while the latter is inherently tied to the owner's specific situation and usage of the property. In scenarios where owners may be looking at a property not purely for resale but for its functionality and economic contribution, recognizing its value in use becomes crucial.