What is the primary distinction between market value and appraised value?

The primary distinction between market value and appraised value lies in their definitions and how they are determined. Market value is typically defined as the price a willing buyer would pay to a willing seller in an open market. It reflects real-time conditions, including buyer demand, property location, and other market factors. This concept is inherently linked to the actions and opinions of buyers and sellers.

On the other hand, appraised value is determined by a professional appraiser's opinion based on a set of established criteria, including property condition, comparable sales, and local market trends. The appraiser's role is to provide an objective assessment of the property's worth, which may not always align closely with the actual market activity at that time.

Understanding this distinction helps in recognizing that while both values provide insights into a property's worth, market value is influenced by buyer decisions, while appraised value is a calculated estimation by a third party. This differentiation can impact real estate transactions and financing, as lenders often rely more on appraised values for determining loan amounts.