What is the definition of market value in real estate?

Market value in real estate refers to the most probable price a property would bring in a competitive and open market between a willing buyer and a willing seller, both of whom are informed and not under any pressure to buy or sell. This concept is central to property valuation and is distinct from the asking price or perceived value by an owner, as it is determined by market conditions and the dynamics of supply and demand.

The definition emphasizes that market value reflects the actual economic conditions affecting real estate transactions. It is an objective assessment based on comparable sales data, current market trends, and other relevant factors. This understanding is crucial for real estate professionals as it guides pricing strategies, negotiations, and financial assessments.

Other choices describe different aspects related to property pricing. For instance, while the price a property owner hopes to receive may reflect personal expectations or aspirations, it does not capture the fair market dynamics. The assessed value determined by tax authorities is typically a valuation for property tax purposes and may not represent true market conditions. Lastly, stating the average price of similar properties overlooks the specific conditions unique to the subject property, which can skew understanding of its true market value.