What does the term "market value" refer to in real estate?

Market value in real estate refers to the estimated price a property would sell for on the open market, typically determined by examining comparable sales in the area. This concept is crucial because it reflects an unbiased view of what a willing buyer would pay a willing seller, both acting under no undue pressure. The use of comparable sales helps appraisers assess the property's value in the current market context, considering factors such as location, property features, and recent transactions of similar properties nearby.

While the price a property sells for can sometimes represent market value, it may not always reflect it accurately, particularly if the sale was influenced by external factors or if the market was not functioning efficiently at the time. Similarly, the value agreed upon by a buyer and seller can be subjective and may not correspond to the market's consensus. The assessed value for taxation purposes is determined for the specific aim of taxation and does not necessarily reflect true market conditions or values. Thus, focusing on comparable sales provides a more objective and reliable basis for determining market value.