The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this concept is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their own best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. For instance, a house sold under duress due to foreclosure proceedings will likely not achieve its full worth, while a property sold between family members may reflect a price below its true worth.
Accurate establishment of a property’s worth is paramount for various reasons. It serves as the foundation for lending decisions, insurance coverage, and taxation. Understanding this figure allows both buyers and sellers to make informed decisions, ensuring fair transactions. Furthermore, it protects stakeholders from overpaying or underselling assets. The concept has evolved over centuries, adapting to changing economic climates and market dynamics. Its relevance has grown with increased property ownership and the complexities of financial markets.
