Market Value
The price a property would sell for in a competitive market between a willing buyer and seller.
Definition
Market value is the price a property would most likely sell for in an open and competitive market, assuming a willing buyer, a willing seller, both parties acting knowledgeably, and sufficient time for proper marketing. It is the foundation for appraisals, loan underwriting, and investment decisions.
Market value is distinct from assessed value (the value assigned by the county for tax purposes, often outdated or conservative) and from listing price (what a seller asks, which may be above or below market). It is determined by actual recent sales of comparable properties.
For investors, buying below market value is the fundamental advantage sought in every acquisition. Finding properties below market value — through motivated sellers, foreclosures, wholesalers, or off-market relationships — is the primary driver of returns in value-add, flip, and wholesale strategies.
Related Terms
Comparable Sales (Comps)
Recent sales of similar properties used to estimate the market value of a subject property.
Appraisal
A licensed professional's independent estimate of a property's market value.
After Repair Value (ARV)
The estimated market value of a property after all renovations are completed.
Absorption Rate
The rate at which available homes sell in a given market during a time period.
Also in "M"
Maximum Allowable Offer (MAO)
The highest price an investor can pay for a property and still achieve their target profit.
Mortgage
A loan used to purchase real property, secured by the property itself as collateral.
Multifamily Property
A residential building containing two or more housing units — from duplexes to large apartment complexes.