How is market value defined in real estate terms?

Market value in real estate is defined as the most probable price a property would sell for in an open market under fair conditions, with both the buyer and seller acting knowledgeably and without undue pressure. This definition is crucial because it reflects the consensus of value as determined by current market conditions and buyer willingness, rather than personal feelings or specific circumstances unique to the seller or the property.

Understanding that market value is based on open market dynamics helps to differentiate it from other values such as assessed value for taxation (which does not always reflect current market trends) or the price a homeowner may desire to receive, which could be influenced by emotional connection or past investment rather than market realities. Market value encompasses a wider range of factors, including comparable sales, economic conditions, and property location, all of which help establish a fair price that the market would support.