Market Value

The concept of market value may seem intuitively obvious in that it must be the price a property would reach if sold. In fact, though, the phrase market value is a term of art, and has a distinct meaning within the world of real estate. A formal definition of the phrase is supplied by the International Valuation Standards Committee, an international industry association based in London. According to this, market value is the price a property would reach if sold on the open market, reasonable marketing efforts are employed to advertise its availability, both buyer and seller have typical motivations, and no market disruptions are in effect. So, under normal circumstances, the market value will be equal to the market price. Under unusual conditions, though, this may not be so. An example of an unusual circumstance which might cause market value and market price to differ would be the forced sale of a property through bankruptcy. In this case, the seller may be forced into a hasty transaction and may not have time to market the property sufficiently to realize its true value.

The concept of a propertys market value is widely referred to in legislation pertaining to property matters, such as, for example, tax regulations.

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