What does the term 'Utility' refer to in property valuation?

In property valuation, the term 'Utility' refers to the usefulness of a property to the owner or society. This concept emphasizes the idea that a property's value is largely determined by its capacity to provide satisfaction, benefits, or services to its users. A property must meet certain needs or desires, which can vary based on different factors such as location, design, and the amenities it offers.

For instance, a residential home may possess a high level of utility if it accommodates a family's needs through adequate space, facilities, and proximity to schools or workplaces. Similarly, commercial properties that serve essential functions to businesses or the community also exhibit high utility.

This understanding that utility can influence the demand for a property is crucial in the appraisal process, as it helps appraisers assess how the property can be valued based on its contribution to potential enjoyment or productivity for the owner or users.