What is meant by "market value"?

Market value refers to the price at which a property would sell under normal conditions, often described as "market conditions." This means that both the buyer and seller are acting in their own best interests, and the transaction is taking place in an open market where both parties have access to all relevant information. This price is influenced by various factors, including the property's condition, location, and the general real estate market dynamics at the time of the sale.

In contrast, cost of construction focuses purely on the expenses incurred to build the property, not the price it would command in the market. The price a buyer is willing to pay could be subjective and influenced by personal preferences or emotional considerations rather than a fair market assessment. Lastly, the assessed value by tax authorities is primarily related to property taxation and may not reflect the current market conditions or actual sales price. Thus, market value encompasses a broader and more accurate picture of a property's worth in a functional marketplace.