WHAT IS MARKET VALUE?
Estimating the market value of a property is usually the goal of an appraisal. There are numerous technical definitions of the term market value, but in layman’s terms, Market Value is usually defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale. It is assumed that the buyer and seller are typically motivated, well informed or well advised and each acting in their own best interest.
The explanation of “market value” in this article applies to single family houses only. Different methods apply to apartments and other commercial real estate. The meaning of “market value” confuses many people. As consumers, most people shop at retail stores and pay the price printed on the price tag. A sweater is worth $24.95 because the price tag says so. A hammer is worth $10.95 because the price tag says so. We really don’t question it, because we are programmed to pay the amount of money listed on the price tag. When stores have sales on certain items, it is because the store did not sell all of these items for the listed price within a certain period of time. The sweater was not worth $24.95 to enough people. Therefore, the store must now lower the price to persuade people to buy the remaining sweaters. At the beginning of the Fall clothing season, the market value of the sweater was $24.95. In March, when we have more interest in Spring clothes, the market value may drop to $9.
Market value is defined as the price that could be obtained at a private sale or an auction sale, if the assessor determines the price from an auction sale represents an arms-length transaction. The price obtained at a forced sale shall not be considered. In other words: Market value is the price that would prevail under competitive open-market conditions.
The meaning of “market value” confuses many people. As consumers, most people shop at retail stores and pay the price printed on the price tag. A shirt is worth $24.95 because the price tag says so. A hammer is worth $10.95 because the price tag says so. We really don’t question it, because we are programmed to pay the amount of money listed on the price tag. When retail stores have sales on certain items, it is because the store did not sell all of these items for the listed price within a certain period of time. The sweater was not worth $24.95 to enough people. Therefore, the store must now lower the price to persuade people to buy the remaining sweaters. At the beginning of the Fall clothing season, the market value of the sweater was $24.95. In March, when we have more interest in Spring clothes, the market value may drop to $9.95. Real Estate Market value can be defined as the probable price that a property will sell for, on the date of appraisal, allowing for a reasonable time t
