How is "market value" defined in real estate?

Market value in real estate is defined as the price at which a property would sell in a competitive and open market, where both the buyer and seller are acting in their own best interests and have reasonable knowledge of the relevant facts. This definition reflects the concept that market value is not just about a specific sale price but rather the expected value derived from a thorough analysis of similar properties on the market, the overall economic conditions, and the specific attributes of the property itself.

When determining market value, real estate professionals consider factors such as location, property condition, comparable sales, and the current market demand. This comprehensive view allows for an accurate assessment that is essential for making informed buying and selling decisions.

Other options present differing contexts that do not accurately represent the standard definition of market value. For example, a property's purchase price by an investor may be influenced by various strategic factors and may not reflect its true market value. A distressed sale can often lead to a lower sale price, which does not provide an accurate measure of market value, as it represents a forced transaction rather than normal market conditions. Lastly, averaging property values in a neighborhood does not account for individual property characteristics and current market dynamics, leading to a skewed assessment. Hence, the correct definition of market