How is "market value" defined in appraisal?

Market value is defined as the most probable price a property would bring in a competitive and open market, where both buyer and seller are acting prudently and knowledgeably, and where the property has been exposed to the market for a reasonable period of time. This definition emphasizes several key principles in real estate appraisal, including the concepts of most probable price, competitive market conditions, and the assumption of reasonable exposure time.

In a competitive market, the interplay of supply and demand helps establish this price. It reflects not just any price that could be achieved under different circumstances, but specifically the price that is likely to occur when market participants operate under normal conditions. This definition helps appraisers provide a rational and data-supported estimate of value, making it a fundamental concept in appraisal practice.

Other options may reflect certain aspects of value, such as assessed value for tax purposes or subjective desires of sellers, but they do not encapsulate the objective and market-driven nature of true market value. The average price of properties in an area does not account for the specifics of a particular property, and personal seller desires do not necessarily reflect the market's perception of value. Therefore, defining market value as the most probable price attained in a competitive market accurately captures the essence of what appraisers seek to