Property Value and Appraisal

The most probable price a property should bring in a competitive, open market under all conditions requisite to a fair sale, with buyer and seller each acting prudently and knowledgeably. It is an estimate, not a historical fact.

Market price is what a property actually sold for in a completed transaction; market value is an opinion of what it should sell for. Price can deviate from value when a sale is not arm's-length or conditions are unusual.

Cost is the amount spent to produce or build an improvement (a past or present outlay); value is what the market will pay for it. An improvement can cost more than the value it adds.

Unrelated buyer and seller, each acting in their own interest, both reasonably informed, no undue pressure, reasonable market exposure time, and payment in cash or typical financing terms.

It is not an arm's-length transaction; the relationship may produce a price that does not reflect market value (for example a discount to a relative).

Value in use is the worth of a property to a specific user for a specific purpose (subjective); value in exchange is its worth in the open market (objective, akin to market value).