What does the term "market value" refer to in real estate?

The term "market value" in real estate refers to the estimated amount a property would sell for in the current market. This definition considers various factors that can affect a property's price, including current buyer demand, prevailing economic conditions, the location of the property, and comparable sales of similar properties in the area. It is an objective assessment that reflects what a knowledgeable buyer would be willing to pay to a willing seller in an open market scenario without any undue pressure.

Market value is crucial for various stakeholders, including buyers, sellers, and appraisers, as it provides a grounded understanding of how much a property is worth at a specific point in time. This assessment is often based on recent sales data and trends in the market and does not rely on subjective expectations or historical prices. Other options, such as the price a seller hopes to receive or the historical price paid, do not reflect the current market conditions or potential buyer interest, making them less accurate representations of market value. Similarly, the value assigned by a tax assessor often serves different purposes, such as taxation, and may not align with the true market dynamics.