How is Market Value defined in the context of appraisals?

Market value in the context of appraisals is defined as the most probable sale price of a property under typical market conditions. This concept hinges on the idea that market value reflects what a willing buyer would pay to a willing seller in an open and competitive market, where both parties are informed and motivated, and neither is under duress.

This definition takes into account various factors that influence property transactions, such as location, property condition, market conditions, and comparable sales. It serves as a key metric for appraisers, realtors, and potential buyers and sellers to assess the worth of a property.

In contrast, the highest price a seller is willing to accept doesn’t necessarily reflect the market dynamics or the actual transaction; it may be influenced by individual circumstances. Similarly, the average selling price over the last year may not accurately represent current market conditions, as it could be skewed by outliers or changes in demand. Lastly, the value determined by a government appraisal, while potentially useful, may not align with the open market dynamics since it can depend on different criteria and methodologies that do not consider the competitive nature of private transactions. Therefore, understanding market value as the most probable sale price encapsulates the essence of fair market dynamics in real estate transactions.