What does the term "market value" refer to?

Market value refers to the current worth of a property based on various factors, including its condition, location, and the economic environment. It reflects the price that a typical buyer would be willing to pay for the property in the open market under normal conditions. This valuation takes into consideration recent comparable sales, the demand and supply dynamics within the market, and the overall economic conditions.

This is distinct from other terms such as the price at which a property was last sold, which may not accurately reflect current market conditions due to potential fluctuations in the real estate market since that sale occurred. Similarly, the tax assessed value is typically based on a government appraisal that may not align with the current market conditions and often lags behind real fluctuations in property value. The original purchase price of a property also does not appropriately represent its current market value, as it does not account for changes in market dynamics or property condition since the time of that purchase.

Understanding market value is crucial for real estate professionals as it aids in pricing properties correctly and providing accurate evaluations during transactions.