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

There are two definitions of annexation in real estate. The first definition of annexation in real estate deals with the expansion of cities and the accompanying zoning laws. When a city ...

In valuing real estate, substitution is the principle that the market value of a property can be relatively accurately estimated by determining market value of similar properties in the ...

A rental contact in which the tenant's rental is tied to a change in the price level, such as the Gross National Price Deflator. ...

The National Association of REALTORS® (NAR) is not only a commonly used term in the real estate industry, but it is also the largest trade association in the US. With over 1.4 million ...

See estoppel. ...

An opening that lets the outside air come in or out of a structure. A ventilation fan lets the structure have access to outside air when the switch is in open position. ...

(1) The interest rate used to convert future receipts or payments in connection with real estate property to their present value. The cost of capital is used as the discount rate under the ...

Evaluation of housing requirements based on family size, ages, occupations, marital status, and other population characteristics. ...

Combination of insurance policies on property with each providing an additional increment of coverage exceeding the limits of the preceding policy. For example, policy A adds $70,000, then ...

Popular Real Estate Questions