Ah, market value.  That magical amount of money that a property is worth.   It’s commonly stated that a property properly exposed to the market will sell for market value.   But what is that really?   Some people think that market value is whatever a property sells at, but that is not necessarily the case.   Ask the people who’s business it is to estimate market value and they will say market value is:

The most probable price which a property should bring in a competitive and open market 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. 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: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash or in terms of financial arrangements comparable thereto; and 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

Those guys aren’t concise.   And that definition is littered with other terms that can’t be precisely nailed down.   How motivated could a buyer be and still be considered “typically motivated”?  What constitutes sufficient advice to be well advised?   Do incentives like the government’s free money for first timers count as undue stimulus? Continue reading →