What is meant by market value in real estate?

Market value in real estate refers to the value in exchange, which is the most accurate reflection of how much a property is likely to sell for in a competitive market. This value is determined based on what a willing buyer would pay to a willing seller in an open and unrestricted market, devoid of any external pressures or influences.

Market value incorporates various factors including the property’s location, condition, and the prevailing economic environment. It is established through comparable sales analysis, where similar properties in the area that have recently sold are evaluated. This method provides a realistic basis for assessing how much buyers are willing to pay and how much sellers are willing to accept.

The other options do not accurately capture the essence of market value. For instance, value to the seller is subjective and does not reflect market dynamics; value in appraisal fees relates to the cost of obtaining an appraisal rather than the property’s worth; and value determined by government assessment typically refers to assessed value, which may differ from true market value due to varying methodologies used by government entities for taxation purposes.