What is meant by the term "market value" in real estate?

The term "market value" in real estate refers to the price that a buyer is willing to pay and a seller is willing to accept in an open market, assuming both parties are acting knowledgeably and without undue pressure. This definition captures the essence of market conditions: it reflects a fair exchange based on supply and demand dynamics. Market value is determined by ongoing transactions and the current economic environment, rather than arbitrary figures or valuations set by an individual party.

In essence, market value is a realistic and practical figure that emerges from the interactions between buyers and sellers. It does not represent an average price of similar homes sold recently, the potential for a maximum listing price, or solely an appraised value, as these concepts do not fully encapsulate the live negotiation process that defines market dynamics.