Which statement correctly distinguishes market value and market price?

Which statement correctly distinguishes market value and market price?

• A. Market value is the actual price paid in a transaction; market price is the estimated price in a fair sale.
• B. Market value is the estimated price in a fair sale; market price is the actual price paid in a transaction.
• C. Market value equals replacement cost; market price equals the listing price.
• D. Market value is determined by tax assessment; market price is the appraised value.

Answer: (B)

The main idea is distinguishing what a property is worth in theory versus what a buyer actually pays. Market value is an estimated price a property should bring in a fair, arms-length sale under current market conditions. It’s a reasoned judgment based on factors like comparable sales, condition, and demand. Market price, on the other hand, is the actual price that ends up being paid in a specific transaction. So, the statement that market value is the estimated price in a fair sale and market price is the actual price paid in a transaction matches this distinction. For example, a home might be worth about 350,000 in the market (market value), but if buyers bid it up and it sells for 360,000, the 360,000 is the market price. Other options mix up these ideas: replacement cost or listing price aren’t the same as market value or market price, and tax assessments or appraised values are valuation measures, not the actual sale price.

The main idea is distinguishing what a property is worth in theory versus what a buyer actually pays. Market value is an estimated price a property should bring in a fair, arms-length sale under current market conditions. It’s a reasoned judgment based on factors like comparable sales, condition, and demand. Market price, on the other hand, is the actual price that ends up being paid in a specific transaction.

So, the statement that market value is the estimated price in a fair sale and market price is the actual price paid in a transaction matches this distinction. For example, a home might be worth about 350,000 in the market (market value), but if buyers bid it up and it sells for 360,000, the 360,000 is the market price.

Other options mix up these ideas: replacement cost or listing price aren’t the same as market value or market price, and tax assessments or appraised values are valuation measures, not the actual sale price.