Definition of "Market value"

When an Appraisal is done, its ultimate goal is to define a Market Value for that property. So, in short, market value is the value of a real estate property in a free competitive market.

Many variables are considered by the Appraiser when analyzing the monetary worth of a property. Supply and demand are the essential factors, but there are others - like structural condition and aesthetic features - that also weigh into the appraiser’s analysis. Sometimes, when a comparative analysis is not enough to assert a price to the house, an Appraiser would use the Replacement Cost and the Income Approach to better evaluate them.

Market Values are not set in stone. Here are three things that can affect it:

- Location, location location. It’s a real estate cliche, right? Because it’s true. A house that is completely identical to another (build-wise) can get sold at a much higher price just because it’s in a premier location.
- Plastic Surgery. You can improve the effective age of your house (and its value) by doing renovations and adding valuable assets to your house. A sauna could not only provide you a good time during the winter, but also bring the market value of your home up.
- Chance. If a trendy retailer sets shop across the street from you, your house may have a spike on its market value. But it could go the other way around too, if - for example - there’s a spike in criminal activity within your area.

The truth is that a comprehensive appraisal keeps an eye on all available information in order to have a clear picture of the property’s value.

Real estate tips: 

Find more terms in our real estate Glossary!

And use The OFFICIAL Real Estate Agent Directory® to find an agent for you!

 

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Expenditures incurred to develop real estate. An example is the cost to build a shopping center. ...

Net operating income (NOI) of property relative to its market value. If rental income property worth $1,000,000 results in NOI of $100,000, the overall return is 10%. NOI compared to ...

Upgrading made by a lessee to leased property. Examples are paneling and wallpapering. These improvements revert to the lessor at the expiration of the lease term. As improvement costs are ...

For real estate investors, the vacancy and credit loss is a way to determine a property’s potential for profit. This value is determined by subtracting the losses brought by vacant ...

Book value is a quintessential term used in the financial world and the real estate business. Though, there are slight differences in its interpretation in these two areas of ...

In appraisal jargon, property currently being appraised. ...

Legal right or privilege, such as that arising from a contract, to use land owned by another person or business for a specific purpose. The use should be reasonable for the circumstances. ...

Act of postponing a closing for another day or place. Adjournments of closing can occur for a variety of reasons including the lack of an appropriate closing statement, one or more parties ...

Special court for the purpose of providing fast, inexpensive and informal settlement of small financial claims between plaintiff and defendant. The parties represent themselves. A landlord ...

Popular Real Estate Questions