Open market value is not a defined basis within the current or pending Global Red Book Standards. It has been phased out as a globally defined concept and was not included from the 5th edition of Red Book effective from May 2003. The IVS defined ‘market value’ is now predominate.
Market value is defined in Global Red Book Standards and IVS as ‘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.’
There is no reference to ‘open’ within this definition.
It is accepted that valuers may be required through, for example, law or contract to undertake a valuation on a basis that is not defined in Red Book Global Standards, such as open market value. In this case it must be clearly defined and stated in the report, which must also draw attention to the fact that it is a departure if use of the basis in the particular valuation assignment is voluntary and not mandatory.
Where the valuer is required to value on a non-Red Book Global defined basis such as open market value through law or regulation, the valuer might better understand the meaning of the basis by reference to the detail of the legislation/regulation, relevant case precedent and any relevant and authoritative guidance produced by the lawmaker/regulator. RICS does not generally offer legal interpretation of such terms.
In some cases, the valuer may be tasked with valuing in accordance with a specific historic basis of value previously produced by RICS, in which case we can support with previous definitions if details of the relevant standard and date are provided.
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