Which term is used to describe the most probable price a property should bring under competitive market conditions?

Market value refers to the most probable price a property should bring under competitive market conditions, which takes into account what informed and willing buyers would pay and what informed sellers would accept. This concept is essential in real estate as it reflects the equilibrium point in the supply and demand of the market. It considers factors such as location, property condition, and comparable sales to estimate what a reasonable price would be in an open market environment without undue pressure on the buyer or seller.

In contrast, liquidation value pertains to the quick sale of a property, often below market value, in order to settle debts or obligations—it reflects the minimum amount a seller might expect if they needed to sell quickly. Assessed value is utilized primarily by local governments for taxation purposes, often based on a fraction of the market value and not reflective of current pricing in a competitive market. Salvage value refers to the estimated resale value of a property’s components or materials at the end of its useful life, which is not relevant when discussing probable sale prices under normal market conditions.