How is market value defined?

Market value is defined as the price for which a property will theoretically sell under typical conditions. This definition is rooted in the concept of a hypothetical transaction occurring in a competitive marketplace, where both the buyer and seller are informed and acting in their own interests. It reflects the consensus of what the property is worth at a specific time, based on current market conditions, demand and supply dynamics, and comparable property sales.

This definition emphasizes the notion of "theoretical" because it assumes that the sale takes place within a fair market without undue pressure, coercion, or significant limitations affecting either party's decision-making. Market value considers various factors such as the property's location, physical characteristics, economic conditions, and prevailing real estate trends.

In contrast, other options refer to different concepts related to property valuation. The estimated value of a property based on inflation considers adjustments over time rather than market conditions at a specific moment. The actual transaction price of recent property sales reflects specific instances of property exchanges but doesn't always indicate true market value due to potential unique circumstances surrounding each transaction. The appraised value by a certified professional provides a formal estimation based on a thorough analysis of various factors, but it is ultimately a subjective interpretation that may not align perfectly with market conditions.