What does "market value" represent in real estate?

Market value in real estate represents the price a property is expected to sell for under normal conditions. This concept reflects what a willing buyer would pay and a willing seller would accept after adequately exposing the property to the market. It assumes that both parties are knowledgeable and acting in their own best interests, without undue pressure to complete the transaction.

Market value differs from other valuations, such as assessed value for tax purposes, which may not accurately reflect current market conditions. It also contrasts with estimated replacement cost, which refers to the expense of constructing a similar property, and projections of future value, which speculate on how much a property might be worth at a later date based on trends or market indicators. Understanding market value is crucial for buyers, sellers, and real estate professionals as it helps guide pricing strategies and investment decisions.