How is market value defined?

Market value is defined as the price at which a buyer and seller agree to transact, given both parties are informed and willing to engage in the sale without coercion. This definition emphasizes the concept of a fair market transaction, where the price reflects the current economic conditions and the subjective motivations of both parties involved. The essence of market value lies in the actual exchange in a competitive marketplace, which takes into account various factors including demand, supply, and the unique attributes of the property.

In contrast, the value assigned by government assessments often serves a different purpose, such as taxation, and may not reflect true market dynamics. Projected future value considers potential changes over time but does not signify the existing market value. Lastly, evaluating value based solely on material costs disregards many critical components that contribute to a property's worth, such as location, market conditions, and buyer/seller negotiations. Thus, the correct understanding of market value is most accurately encapsulated by the agreement between buyer and seller in a real transaction context.