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

"Market value" in real estate is best defined as the estimated selling price of a property when it is placed on the open market. This reflects the value that a property would fetch under normal conditions, assuming a willing buyer and a willing seller are involved, and that both parties have reasonable knowledge of the relevant facts.

This concept focuses on the idea that market value is determined by the dynamics of supply and demand within a specific market. It represents the amount that buyers are generally prepared to pay for a property in a competitive market environment, which aligns closely with the concept outlined in the selected answer. Factors such as property condition, location, market trends, and comparable sales all influence this estimated selling price.

While the value of a property based on rental income is certainly important for investment properties, it does not equate to market value in a broader sense. Similarly, the tax assessment value is often derived from a property’s market value but may not accurately reflect actual market conditions, as tax assessments can be outdated or calculated differently from current market trends. The price a buyer is willing to pay can reflect market conditions but is not the definitive measure of market value without the context of further analysis.