{"id":9443,"date":"2018-02-28T02:33:37","date_gmt":"2018-02-28T02:33:37","guid":{"rendered":"http:\/\/www.realestatewords.com\/?page_id=9443"},"modified":"2022-05-19T14:36:26","modified_gmt":"2022-05-19T14:36:26","slug":"value-of-property","status":"publish","type":"page","link":"https:\/\/www.realestatewords.com\/value-of-property\/","title":{"rendered":"Value of Property"},"content":{"rendered":"

Value of Property Definition<\/h2>\n

The value of property<\/strong> is most commonly understood as the price someone will pay for it.<\/p>\n

In real estate, however, value is reflective of a specific definition of value known as market value<\/strong><\/a>. This definition is typical for lending purposes.<\/p>\n

Market value of property<\/strong> means the most probable price which a property should bring in a competitive and open real estate market<\/a> under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.<\/p>\n

Explanation<\/h2>\n

Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:<\/p>\n

    \n
  1. Buyer and seller are typically motivated<\/li>\n
  2. Both parties are well informed or well advised and acting in what they consider their own best interests<\/li>\n
  3. A reasonable time is allowed for exposure in the open market<\/li>\n
  4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto, and<\/li>\n
  5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.<\/li>\n<\/ol>\n

    In every appraisal<\/a>, the market value must be clearly defined.<\/p>\n

    In short, the term ‘market value’ in an appraisal is specific to the market (i.e multiple potential buyers)<\/strong>, not just one buyer who is atypically motivated.<\/p>\n

    It is a common misconception that market value is whatever someone is willing to pay, however. That is actually \u201cmarket price\u201d, which is similar to what one pays at a concession stand in a movie theater or sporting event or what one pays for a special fresh fish in a high end restaurant which has a limited supply of that menu item.<\/p>\n

     <\/p>\n