What does "market value" refer to in the context of real estate appraisal?

In the context of real estate appraisal, "market value" is defined as the price at which a property would sell in a competitive and open market, where both buyers and sellers act without undue pressure to transact. This definition encapsulates the influence of overall market conditions, trends, and the property’s attributes. Market value considers what a well-informed buyer would reasonably pay for the property and what a knowledgeable seller would accept in a free market environment, often relying on comparable property sales to establish this price.

This understanding is critical for appraisers as they evaluate properties and develop fair and accurate appraisals. Analyzing the competitive dynamics of the market allows appraisers to gauge the true worth of a property, separate from personal opinions or subjective assessments.