Affiliate Broker Tennessee (TN PSI) National Practice Exam `

Which term describes the price a property is worth to its owner based on current enjoyment?

1. Market value

2. Value in use

3. Investment value

4. Liquidation value

The correct answer is: Value in use

The term that accurately describes the price a property is worth to its owner based on current enjoyment is "value in use." This concept refers to the value that property holds for an individual based on their subjective assessment of its utility and satisfaction derived from it. It is inherently linked to the specific circumstances or enjoyment that the owner experiences while using the property, rather than just its market or resale potential. For example, a homeowner might place a high value on their property because it meets their personal needs, such as location, layout, and amenities, even if the property might not fetch that same price if sold on the open market. In contrast, market value pertains to the price a property would likely sell for in a competitive and open market, reflecting broader market conditions rather than individual perceptions. Investment value is concerned with the value a property may provide to a specific investor based on their unique investment criteria. Liquidation value refers to the quick sale price of a property, often at a discount due to the urgency of the sale. Thus, "value in use" captures the intrinsic worth of the property to the current owner, focusing on personal enjoyment and benefit.