IVS 104 Market Value — definition and RICS applications
The international definition of Market Value set by IVS and adopted by RICS Red Book Global Standards 2025. Clause-by-clause decryption and practical consequences for any Moroccan appraisal.
« Market Value is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion. »
Definition clause-by-clause
« Estimated amount » — approximation, not certainty. Report must present range and sensitivities. « For which an asset should exchange » — exchange value, not use value or operating value for current user. « On the valuation date » — value is dated; market may shift. « Willing buyer and willing seller » — neither is forced. No judicial forced sale. « Arm's length transaction » — excludes related-party operations. « After proper marketing » — bien correctly exposed to market for adequate time (3-12 months per segment). « Acted knowledgeably » — each disposes of pertinent information. « Prudently » — rational behaviour, without euphoria or panic. « Without compulsion » — no timing, liquidity, procedural constraint.
Articulation with other bases of value
IFRS 13 Fair Value — convergent with Market Value IVS 104. RICS Red Book reports suffice for IFRS reporting in most Moroccan entities. Existing Use Value — value for current user in current configuration and activity. Often different from Market Value. Insurance reinstatement value — new-build replacement cost. Very different from Market Value. Replacement value — useful in insurance or industrial arbitration. Mortgage Lending Value — base used by some European banks; not standard applicable in Morocco.
Practical consequences for Moroccan reports
A Moroccan appraisal referencing IVS 104 / RICS Red Book engages the expert to: document basis of value retained on first page; justify definition conditions are met (adequate marketing, willing parties, no compulsion); distinguish walls value and business value for combined assets; present sensitivities or range around central value; specify valuation date non-equivocally.
- Basis of value stated upfront
- Valuation date specified clearly
- Marketing adequacy verified
- Arm's length conditions confirmed
- Parties' acting knowledgeably verified
- Sensitivity around central value
- Walls vs business distinction made
- Basis of value not stated
- Valuation date missing or ambiguous
- Forced-sale context disguised as Market Value
- Single point estimate without range
FAQ
What if the actual transaction is between related parties?
Related-party transactions don't qualify as 'arm's length' per IVS 104. Such prices can serve as data points but should NOT be retained as Market Value comparables. The expert documents the exclusion.
Can RICS report serve both IVS and IFRS reporting?
Yes for most assets — IVS 104 Market Value definition is convergent with IFRS 13 Fair Value definition. A single RICS Red Book Global Standards 2025 report typically meets both requirements.
Related reading
- IFRS 13 fair value — practical application
- Market value — French jurisprudence
- RICS Red Book bases of value
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