How is “market value” defined in real estate?

Market value in real estate is best defined as the estimated price that a property would sell for on the open market, which captures the most accurate reflection of property value based on current market conditions. This definition accounts for the interaction between buyers and sellers in a competitive market and incorporates factors such as location, property condition, and local demand.

Market value represents what a knowledgeable buyer would realistically pay and what a motivated seller would agree to accept, assuming both parties act in their own best interests and are not under undue pressure to complete the transaction. This understanding helps real estate professionals evaluate properties and provide accurate pricing advice.

The other options, while related to the concept of property valuation, do not accurately capture the essence of market value. For instance, the average price of similar properties in the area may help inform market trends but does not directly define market value, as it fails to account for unique property characteristics and conditions. Similarly, the price a seller desires reflects personal sentiment and ambition rather than an unbiased market assessment. Finally, the assessed value determined by tax authorities serves different purposes, primarily related to taxation, and may not align with true market dynamics. Thus, identifying market value as the estimated price a property would fetch in an open market transaction provides a clearer and more