What does the term 'use value' refer to in real estate?

The term 'use value' in real estate specifically refers to the value derived from the potential uses of a property as anticipated by the owner. This concept emphasizes how a property may be valued not just based on its current market conditions or the average prices of similar properties, but rather on what the owner envisions for its future applications. Such considerations may include personal plans for development, income generation, or any specific functionality that the property provides to the owner, aligning with their goals and objectives.

Understanding 'use value' is crucial for appraisers, as it goes beyond mere market trends or comparable sales, focusing instead on the unique circumstances surrounding the property's intended use. This approach can significantly impact appraisals, particularly when the property has specialized aspects or potential that standard market comparisons might overlook.