Market Value
Market value is the estimated amount for which a property would exchange between a willing buyer and willing seller in an arm's length transaction after proper marketing. It represents the most probable price a property should bring in a competitive and open market under fair sale conditions.
Example
“The appraiser determined the market value of the three-bedroom home to be $425,000 based on recent comparable sales in the neighborhood.”
Memory Tip
Think 'What would the MARKET pay for VALUE' - it's what buyers actually fork over, not what you wish it was worth.
Why It Matters
Understanding market value helps sellers price their property competitively and buyers ensure they're not overpaying. It's also crucial for mortgage lenders who need to ensure the loan amount doesn't exceed the property's actual worth.
Common Misconception
Market value is not the same as assessed value for tax purposes, which is often lower and used only for property tax calculations.
In Practice
A seller might list their home for $450,000 based on recent comparable sales, but if appraisers and buyers consistently value it at $425,000, the true market value is $425,000. The seller would need to adjust their price expectations accordingly.
Etymology
Derived from Latin 'mercatus' meaning marketplace and 'valere' meaning to be worth, reflecting the ancient Roman concept that something's worth is determined by what buyers will pay in the marketplace.
Common Misspellings
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