What is meant by "market value" of a property?

The concept of "market value" refers specifically to the price at which a property would sell in a competitive and open market, where both the buyer and seller have reasonable knowledge of the relevant facts and are not under any pressure to transact. This definition emphasizes the voluntary nature of the sale, indicating that the price reflects what a willing, informed buyer would actually pay to a willing, informed seller.

This understanding of market value is crucial in real estate as it helps buyers, sellers, and appraisers determine a fair value for properties in fluctuating market conditions. It considers factors such as current market trends, the condition of the property, location, and comparable sales. In contrast, other options may refer to different pricing metrics that do not capture the essence of market dynamics in the same way. For example, the price set by the owner may not reflect actual market conditions and can vary widely, while assessed value typically reflects taxation purposes rather than true market conditions. The average of recent sales might provide insight, but it does not necessarily equate to the price that a specific property would command in a future transaction.