Basis of value
A short, practical note on basis of value, with the public definition from IVS / Red Book (effective 31 January 2025).
In my practice, a basis of value states what kind of value is being measured, and it has to be chosen before any number. IVS define six: market value, market rent, equitable value, investment value, synergistic value and liquidation value. The basis must suit the purpose of the valuation and be written into both the terms of engagement and the report. Because the same words can be defined differently by different bodies, I always identify the source of the definition.
“The fundamental premises on which the reported values are or will be based”
Source: IVS Glossary 10.03 (adotada no Red Book, VPS 2 para 2.1)
Common confusion
Basis of value ≠ premise of value: the basis says what is measured; the premise (e.g. highest and best use) says how the asset is assumed to be used.