What is market value?

• A. The highest probable price that the property will bring informed and willing sellers, if placed for sale on the open market.
• B. The actual price the property sells for on the open market.
• C. The estimated purchase price of the property by an appraiser.
• D. The price that the seller hopes to obtain regardless of market conditions.

Answer: (A)

Market value is the amount a property would reasonably bring in an orderly, competitive market under normal conditions, between informed and willing buyers and sellers, with adequate marketing and no pressure to buy or sell. The best answer captures this by describing the highest probable price the property will bring when it is offered on the open market to informed, willing participants.

This differs from the actual sale price, which is the specific price at which a property actually sells and can be influenced by timing and negotiation. It also differs from an appraiser’s estimate, which is an expert opinion of value but not the market value determined by buyers’ and sellers’ actions in the market. And it differs from a seller’s hoped price, which may reflect personal goals and market conditions but isn’t the value determined by an open market.