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Valuation and Analysis, 14% of the examination

Market value

The most probable price a property should bring in a competitive and open market, with buyer and seller each acting prudently and neither under duress.

Market value assumes a typical buyer and seller, both well informed, with the property exposed for a reasonable time. Cost is what was spent to create the property, price is what someone actually paid, and value is what it is worth to a typical buyer. A fact pattern that removes one of the market value assumptions is usually testing value in use instead.

See also

Highest and best useThe legally permissible, physically possible, financially feasible use that produces the highest value.

See it in a question

One question from Valuation and Analysis, so the term lands in the context the exam uses it in.

Valuation and Analysis ยท 14%Methods of Estimating Value

An appraiser values a 40-year-old single-family home in an established neighbourhood with many recent sales. Which approach carries the most weight?

Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanour under B&P Code section 123.

Where this is tested

Property Valuation and Financial AnalysisThree short sub-topics carrying fourteen percent, and most of the arithmetic on the exam. The three approaches to value, and the income analysis that turns a rent roll into a number.14%Practise Valuation and Analysis28 questions on this area, every option explained.Practice

Other terms in this area