OK. Let's start with the most basic concept. What is value? What is it that appraisers are offering an opinion about? All of our models must follow from this understanding. There are a number of types of value and definitions of value. Think in the broadest and most generic terms.

You and I have talked about this, Russ, so sit back and let the opinions come in. Where are the rest of you guys?

Reply to post by Scott Cullen, on October 27, 1998 at 08:49:54:

a highly subjective monetary equivelent

Reply to post by Scott Cullen, on October 27, 1998 at 08:49:54:

The concept of "Value" is only meaningful to humans. In my mind, "value" is closely tied to a tree's function. If that function is meaningful to humans, a dollar value can be associated with the function. Function is also closely tied to the highest and best use idea in relation to land use.

To a deer in the woods, a tree offers the function of shade, shelter and cover; there is value in that. To a carpenter, a tree offers raw material for his/her craft; that also has value. The lists can go on and on.

Keyword: function

Best regards,
KWK

Reply to post by Scott Cullen, on October 27, 1998 at 08:49:54:

Hi Scott,
Of course value is a pretty generic term and means different things to different people. I have just finished 2 intensive days at the CTLA table, and really think "youse guys" will be impressed with the verbiage in the new GUIDE. We are getting closer, but still have a ways to go. It is still difficult to get us 7 guys to come to an agreement on these things, and there are a lot more brainy heads out there that have valid and differing opinions. Oh what fun!!!
Keep up the good work, and the interesting threads on the board. It is interesting reading for me.
verytreelylew

Reply to post by lewbloch, on October 27, 1998 at 08:49:54:

Lew, I should have been more clear. I'm not talking about varying personal opinions about value -- there are many. What it might be, could be, should be. There are various types of value which apply differently in different cases. The type must be defined in each appraisal (Uniform Standards of Professional Appraisal Practice, Appr.Fndn. 1998; Appraisal of Real Estate pp. 74-75, Appr. Inst. 1992; Dictionary of Real Estate Appraisal p.92 1993). But there is a generic definition of value which is an umbrella and describes all of the various types. It does not have any of the strings that attach it to one of the typical opinions more than another. Has CTLA considered this meaning of value?

Reply to post by Scott Cullen, on October 27, 1998 at 08:49:54:

Such a deep question! The mainly anthropocentric responses so far reflect where many of us have been trained to see, in the blinkered state of late 20th century humanity. I would like to see value expanded far beyond the human realm. Ecological value of a tree or trees is what drives the system. How we humans see them is largely irrelevant from an ecological perspective, except that if we could se the broader function / process equation we would better appreciate the true "value" of trees.

I wonder how Plato would have manged if he and Socrates had had access to the internet!

Cheers

Julian Dunster
(early in the morning on beautiful Bowen Island)

Reply to post by Julian Dunster, on October 27, 1998 at 08:49:54:

Does the broader ecological value really apply to tree valuation, when we are trying to establish what the monetary value is to the tree's owner? It certainly should not be overlooked in the broad picture, but I'm not sure it has relevance to appraisal in a direct sense. If the tree provides nuts for squirrels, how does the human "owner" (read "temporary steward") benefit and what is this worth in monetary terms?

If we talk about other benefits, such as production of oxygen, carbon sequestering, particulate pollution adsorbtion, etc, maybe we can justify some value, but do they belong to the individual "owner", to the human community, or to the environment as a whole? And should someone have to pay up to the environment, if the money goes to one individual?

Now isn't this a sticky wicket? (I learned that in England )
Russ

Reply to post by Julian Dunster, on October 27, 1998 at 08:49:54:

I will follow my own advice and cite some sources. I should have been more clear about this topic and specified "what is value" in an appraisal context. While appraisal and valuation are generally interchangeable (see Tree Appraisal: What are the differences between Appraisal and Valuation? Arboricultural Consultant, Summer, 1998) please consider the context to be appraisal, i.e. the estimation of monetary value for a specific assignment rather than a more academic or philosophical consideration of what value might be or could be or should be (Davis & Johnson, Forest Management 3rd ed. 1987 McGraw-Hill p. 367).

This is not to suggest that the philosophical discussion is not important, it's just a different line of inquiry.

Reply to post by Scott Cullen, on October 28, 1998 at 18:10:29:

I'm not sure if we are doing it according to the definitions and standards that you mentioned, but I think we are getting closer to the "right answer." Of course there will never be a right answer when we are appraising something that we cannot replace. As you guys have been mentioning, we do not place a value on the abstract (directly) just as other appraisers do not directly add in sentimental or other attributes to cars, houses, jewelry, furs, or whatever.
verytreelylew

Reply to post by Scott Cullen, on October 27, 1998 at 08:49:54:

It is clear that 'value' can be prescribed beyond human implications.

However, for appraisal value, it must be defined by; mitigating, replacement, aesthetics, or some other functional purpose referring
to the monetary value our clients wish to pursue.

Our puposeful opinions can thus be described as:
1. Fuctional findings for value - mitigation, aesthetic, development, i.e.
2. Interpretation - monetary

Any comments?

Sincerly, Steve

Reply to post by Stephen Wiley, on October 27, 1998 at 08:49:54:

Steve, I think you've described parts of the appraisal process. Still looking for a generic definition: What is Value?

Scott

Reply to post by Scott Cullen, on October 27, 1998 at 08:49:54:

Russ said at "re:Reminder 11/6 (244):
"Simple, so simple.....
Value, for anything humans apply the term to, comes down to the fee a willing buyer pays to a willing seller. In short, a monetary amount agreeable to the parties involved.

This assumes a concensus on the fee, and should not be confused with an adversarial relationship where "value" is disputed. "

That's a pretty good definition of Market Value, particularly when indicated by a Sales Comparison Approach. (What they agree on, by the way, is a "price" which may=value but which is not identical with value).

But there's a simpler, less constrained, more generic definition.

Reply to post by Scott Cullen, on October 27, 1998 at 08:49:54:

Scott,

These discussions are thought provocing, and I am enjoying reading them.
Value may have many implications as I earlier mentioned. However, I do think their is
a definition, as do you!

Since, the legal profession uses the word 'consideration' as a means of finding for
equal value, and just cause. I will incorporate this usage in an attempt to define
Value.

Value is the replacement, or offer in exchange of a tangible item of likeness, or considered
by the parties involved to completely fulfill satisfactory the items exchanged.

Just a start

Sincerely, Steve

Reply to post by Stephen Wiley, on November 06, 1998 at 17:37:56:

Steve,

I'm not a lawyer, but I think 'consideration' implies a contract, an agreement to exchange, you give me this & I'll do that. Value is given and accepted by each party, but does value exist only in exchange?

Replacement is value in kind. I think you said 'likeness.' You give me a dollar and I give you back a dollar and we're even. You knock over my tree then give me a new tree to replace it and we're even.

Monetary value often involves dissimilar things. I'll give you x$ you give me the car. You give me y$ I'll prune your tree. You knocked over my tree I want z$.

In each instance, how do the parties decide what x, y or z is or should be? How do they decide what to offer or accept?

Scott

Reply to post by Scott Cullen, on November 06, 1998 at 19:22:18:

Now we are going into the area of society, instead of the individuals. "...how do the parties decide what x, y or z is or should be? How do they decide what to offer or accept?"

In this context, we are starting to look for a concensus of many individuals, or of society as a whole. Perhaps an average or median of sorts. What is considered by many to be the worth of the item in question.

Reply to post by Russ Carlson, on November 06, 1998 at 19:50:38:

Good distinctions Russ.

There may be cases when actual, historical agreements between individuals to exchange at a price are considered.

The idea of "market price" is indeed a concensus of many of those individual transactions. Not a consensus as in a vote, but as you say an arithmetic mean or other measure of central tendancy, where the prices tend to cluster under a normal curve. This market price is often what appraisers use to estimate or predict or forecast (if you really want to get into this I'll send you a journal article on which of those terms best applies) market value, or value in exchange.

The questions remain: Does value exist only in exchange? How do those individuals who make up the concensus "...decide what x, y or z is or should be? How do they decide what to offer or accept?" You've used THE key word, but still not incorporated it in a simple definition.

Beyond the concensus of market value, there is the societal concensus. For instance when a society decides that wetlands, or endangered species or historic landmarks are worth protecting a collective value is assigned. It may have little to do with market forces. Dr. Leary would be happy.

Reply to post by Scott Cullen, on November 06, 1998 at 19:22:18:

Scott,

Value does exist without exchange. However, is value noticed, without exchange?

Monetary value is often percieved by the following factors: human usefulness, visual appreciation,
sensual or sentimental concerns, property values, and diverse human emotions.

If value is not observable or made aware of to the parties involved, than is not the issue of value obscured
monetarily.

Thus, value must be the awareness or observation of a certain means of usefulness either practical, emotional,
or beneficial to living organisms.

Sincerely, Steve

Reply to post by Stephen Wiley, on November 06, 1998 at 19:50:38:

Value may be noticed without exchange. "Value in Use" or "Use Value" is recognized by an individual user (Appraisal Institute: 1993 Dictionary of real Estate Appraisal p. 385, 1992 The Appraisal of Real Estate p. 22; Forbes, 1961 SAF Handbook p. 15:27). It may exist even in the absence of a market. It requires only the economic characteristic of 'utility,' it does not also require the characteristics of scarcity and tranferability which are required by market value (Smith & Beloit 1987, Real Estate Appraisal pp. 5, 23). It may vary among individuals (Davis 1966, Forest Management p. 318).

Reply to post by Scott Cullen, on November 09, 1998 at 02:00:34:

You wrote: >> It may exist even in the absence of a market. It requires only the economic characteristic of 'utility,' it does not also require the characteristics of scarcity and tranferability which are required by market value<<

This is where we begin to have trouble in the courtroom. In many cases, the trier of fact is looking for direct market value, related and tied directly to the exchange price of the property. That trees (and other objects) can have value of themselves, separate and apart from exchange value, is where we have to develop a better understanding.

Reply to post by Russ Carlson, on November 09, 1998 at 04:43:23:

Once again, you make important points Russ. All of my input to this discussion has been towards developing the toolbox. Building a firm academic/theoretical foundation and a comprehensive set of models that the appraiser can apply as appropriate.

Many courts look to the contribution to real estate value only. But some courts do admit other values. (Day, Steven, 1997. "A Favorable Decision on Cost of Restoration Versus Fair Market Value," Arboricultural Consultant, MarAp 30(2)) Other courts go in the other direction: I recently testified in CT and the judge refused to admit replacement cost testimony and limited damages to cord wood value.

So, there are two issues: our (appraisers')understanding of the concept of value and the range of available tools to estimate it AND our (society's) understanding of value as reflected in law.

Reply to post by Scott Cullen, on October 27, 1998 at 08:49:54:

The topic question has been answered 11/18/98 at "Value Is" #(294). I appreciate the discussion.

Scott