The first prerequisite to value is defined as what?

The first prerequisite to value is defined as utility. This refers to the usefulness or functionality of a property to a potential buyer. A property must have some degree of utility in order to hold value; if it does not serve a purpose or meet the needs of its users, it is unlikely to be valued highly.

Utility is essential because it establishes a property's capacity to satisfy a want or need. For instance, a building that can be utilized for business purposes has utility because it fulfills a demand in the market. If the property has no utility, it lacks an inherent value, no matter how desirable the location might be or how scarce the property is.

While ownership, demand, and scarcity are important factors in determining overall value and can influence market conditions, the foundational aspect in establishing that value is the utility of the property itself. A property that cannot effectively serve its intended use will fail to attract buyers, regardless of other economic factors, thereby illustrating why utility is the first prerequisite to value.