Objective Value is

• A. the direct cost of creation (acquiring a lot and building a house)
• B. the price the market handed down
• C. the assessed tax value
• D. the insurance replacement cost

Answer: (A)

Objective value is the actual cash outlay to create the property—the cost to acquire the land and build the house today. It reflects the price you would have to pay to bring the asset into existence, rather than what someone is willing to pay on the market or what a tax assessor assigns. The market price represents market value driven by supply and demand, which can differ from cost. The assessed tax value is used for taxation and may not mirror construction costs. Insurance replacement cost is what it would cost to rebuild the property if it were destroyed and can differ from the original creation cost. So, the direct cost of creation best captures what objective value means.