Explain the difference between market value, appraised value, and purchase price.

• A. Market value is current market price; appraised value is an independent opinion; purchase price is negotiated.
• B. Market value is the price you paid for the property.
• C. Appraised value and market value are the same as purchase price.
• D. Purchase price is the guaranteed future value.

Answer: (A)

Market value is the price a property would likely bring in an open, normal market from a willing buyer and seller. It reflects current conditions, demand, and recent comparable sales. Appraised value is an independent assessment by a licensed appraiser using standard methods (like comps, cost, and income approaches) to estimate value for purposes such as financing or taxation. It’s an expert opinion, grounded in data, but not a guaranteed sale price. Purchase price is the amount the buyer and seller actually agree to in the transaction, which is negotiated and can be higher or lower than both market value and appraised value depending on motivation, timing, and terms.

In short, market value is the going market price, appraised value is an independent valuation, and purchase price is the negotiated price of the deal.