Prescott AZ Real Estate – Appraisals and Market Value
Prescott Arizona Property – What is Market Value
The word value has an assortment of meanings, and a real estate parcel may have many values at one time. Since this is the case, the value of a property in Prescott Arizona or anywhere else in the United States is affected by the purpose for which the value is being determined.
Market Value
When doing an appraisal, the appraiser estimates the market value (also known as the fair market value) of the property. Market value has the following characterists:
- The most probable price that a property will bring (not the highest or average)
- Payment in cash equivalent
- The buyer and seller are unrelated and are acting without undue pressure
- The property is exposed to the open market for a reasonable period of time
- The buyer and seller are well informed of both the current market conditions and the property’s use and defects
Market Value vs. Price vs. Cost
When we use the term market value we are referring to the amount that knowledgeable parties will agree to in an open market.
Price is the actual amount for which the property sold.
These two amounts may not be the same due to a variety of circumstances that surrounded a transaction and affected the price paid for the property.
The cost of a property refers to the amount of money used to build and construct improvements in addition to the value of the land. Although in theory the market value, price and cost should be the same, rarely is this the case.