Which statement about market value and appraised value is true?

Which statement about market value and appraised value is true?

• A. Market value is determined by a licensed appraiser.
• B. Appraised value is the price a buyer is willing to pay.
• C. Market value is what buyers are willing to pay in the open market.
• D. Appraised value is always higher than market value.

Answer: (C)

The main idea here is the difference between market value and appraised value. Market value is the price buyers are willing to pay in an open, competitive market for an arm's-length sale. It reflects real-world conditions, negotiations, and what people in the market are prepared to offer. Appraised value, on the other hand, is the appraiser’s professional opinion of value, determined using methods like sales comparison, cost, or income approaches for a specific purpose (often for lender or tax purposes). It’s not a price set by buyers and sellers in the market and can differ from what the market actually pays. Because of that, the true statement is that market value is what buyers are willing to pay in the open market. The other statements mix up who determines value or assume a fixed relationship between appraised and market value that isn’t guaranteed.

The main idea here is the difference between market value and appraised value. Market value is the price buyers are willing to pay in an open, competitive market for an arm's-length sale. It reflects real-world conditions, negotiations, and what people in the market are prepared to offer. Appraised value, on the other hand, is the appraiser’s professional opinion of value, determined using methods like sales comparison, cost, or income approaches for a specific purpose (often for lender or tax purposes). It’s not a price set by buyers and sellers in the market and can differ from what the market actually pays. Because of that, the true statement is that market value is what buyers are willing to pay in the open market. The other statements mix up who determines value or assume a fixed relationship between appraised and market value that isn’t guaranteed.