Ask Henry

Disposition Value

Hello Henry,

Thanks in advance for taking the time to answer my question.

I have a client who's requesting a market value and a disposition value on every commercial report. If you were asked to do this, what steps would you take and how would you go about coming up with your disposition value? Thanks again.

Robert Jones
Certified General Real Property Appraiser

Dear Robert,

The USPAP requires that every appraisal include a statement as to what value is being estimated and a definition of that value. When you use the URAR, the form takes care of this with a statement that the value being estimated is market value, and provides the federally-approved definition of market value. In your scope of work dialogue with the client, you will need to agree on a definition of disposition value. Such a value would consider the typical marketing period, which would likely be different from the typical marketing time used for market value. It also might include how the property would be marketed — perhaps utilizing an auction or some other atypical method. One you have the definition, you will have to find comparable sales that meet those conditions.This often severely limits the availability of comparable data. You could contact the Lum Library of the Appraisal Institute in Chicago at (312) 335-4100 for any published definitions of disposition value.