What does "market value" represent?

Market value represents the price at which a property would sell in an open market, assuming both the buyer and seller are knowledgeable about the relevant facts and are acting in their own best interest. This value is influenced by various factors including the condition of the property, location, market trends, and comparable sales in the area.

This definition reflects the essence of real estate transactions where properties are typically bought and sold through open market negotiations. The concept assumes a level of fairness and a competitive atmosphere, where neither party is under duress to buy or sell, leading to a price that is representative of the property’s true worth in the current market conditions.

Other options like the highest price a seller could ask or the estimated cost to build a new property reflect different concepts that do not encapsulate the idea of market value. The highest price a seller can set may exceed what buyers in the market are willing to pay, while the estimated cost to build a new property does not take into account the existing property's value in the current market context. Finally, a tax appraisal may not reflect market conditions but rather is based on assessment criteria set by local tax authorities, which can also differ from the market value. Thus, the correct understanding of market value is pivotal for both buyers