Which of the following is a major purpose for most appraisal assignments?

• A. Estate tax value
• B. Estate insurable value
• C. Estate market value
• D. Insurance replacement value

Answer: (C)

Market value—the price a property would fetch in an open market under normal conditions—drives most appraisal assignments. Appraisers estimate what a knowledgeable buyer would pay to purchase the property today in an arms-length transaction, and this figure is the basis used by lenders, buyers, and sellers for pricing, negotiating, and financing. That’s why estate market value is the best choice here: it reflects current market reality rather than costs for replacement or tax calculations.

Values used for insurance or tax purposes serve different needs. Insurable or replacement value focuses on how much it would cost to replace the property or insure its contents, not what it would sell for. Estate tax value is determined for taxation and can follow rules that don’t mirror market willingness to pay. So, the major, most common objective of an appraisal is to determine the market value.