What is Market Value?

Market value refers to the price that a property would likely sell for in a competitive and open market, assuming both buyer and seller are acting willingly and have reasonable knowledge of relevant facts. This is based on the concept of "highest and best use," and it reflects the most probable price a property should command under current market conditions.

The definition considers that the transaction occurs under normal conditions, meaning it is not influenced by atypical pressures, such as duress or forced bidding. It implies a fair exchange between an informed buyer and an informed seller, which helps establish a more accurate and reliable value.

Market value is commonly used in various contexts, such as property sales, financing transactions, and tax assessments—the latter being an important distinction. Tax assessments often derive from different methodologies that may not align with actual market dynamics or sales data, and they can reflect values determined for the purpose of revenue generation rather than true market conditions. The evaluation conducted by an appraiser, while it encapsulates professional judgment based on market data, is ultimately aimed at estimating this market value rather than establishing it. The minimum amount a seller is willing to accept is more of a negotiation strategy and does not necessarily reflect the market's perception of value.

In summary, market value is defined by