Can “market value” be different than the contract price or cost of a property?

The short answer is, “Yes!”, it is possible for market value to differ from the actual cost of a property or from the contract price. If a buyer is super motivated to purchase a property and is willing to pay at, or above asking price this will sometimes cause the “market value” to be different from the contract price or cost-to-build price. If a seller is motivated to sell the property quickly and they set the asking price low, this can cause the “market value” to differ from the contract price as well.

Just because a home sold for a certain price, DOES NOT mean that is the market value for the property.  Market value can be higher or lower depending on many different factors. The old adage that, “Real estate only goes up in value.” has unfortunately been proven false.

Value depends on a number of factors such as physical deterioration, exterior influences, geography, national and local economic changes, or other things. A licensed or certified appraiser takes into account all these influences when arriving at an opinion of market value.

Remember “market value” is not the value being paid by (1) one specific buyer. It is the value that the market as a whole would pay for the property.