247SimpleTests
Real Estate · Valuation and Market Analysis

What is the difference between market value and price?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

Market value is the most probable price a property should bring in a competitive, open market under fair conditions, while price is the amount actually paid in a specific transaction, which may differ

  1. A They always mean exactly the same thing
  2. B Market value is set by the seller alone
  3. C Market value is the most probable price a property should bring in a competitive, open market under fair conditions, while price is the amount actually paid in a specific transaction, which may differ
  4. D Price is always higher than market value

Why this is the answer

Market value is an opinion of the most probable price a property should sell for in a competitive and open market, assuming a willing buyer and seller, both acting knowledgeably and without undue pressure, and a reasonable exposure time. Price is simply the amount actually paid in a particular sale. Price can be above or below market value because of motivated parties, special financing, family relationships, or lack of market exposure. Cost (what it took to create or build the property) is yet another concept and may not equal value. The national exam stresses that value, price, and cost are distinct ideas.
Source: Real Estate Principles, Value Price and Cost

Practice more questions

This question is from our Real Estate License Practice Tests practice test. Take the full practice test to test your knowledge across all Valuation and Market Analysis and other topics.

Take the Salesperson (National) practice test →

About this topic: Valuation and Market Analysis

Three approaches: sales comparison (best for residential), cost (best for unique buildings), and income (best for investment property). Skilled appraisers reconcile all three. This is one of 6 Salesperson (National) questions on valuation and market analysis, each with a full explanation on a single study page.

New to this exam? Our Real Estate exam guide explains the format, scoring, and how to prepare.

Related questions

Valuation and Market Analysis

Which of the following is the most important factor in determining a property's value?

 Valuation and Market Analysis

Which approach to value is most useful for unique properties like churches or specialized buildings with no comparable sales?

 Valuation and Market Analysis

Which appraisal approach is most appropriate for valuing a single-family residential home?

 Valuation and Market Analysis

What economic principle holds that a property's maximum value tends to be set by the cost of acquiring an equally desirable substitute property?

State-specific guides

Need information for your state? Our state guides cover local requirements, fees, and what to expect on exam day.

California Texas Florida New York Pennsylvania Illinois Ohio Georgia

Recommended study materials

Study guide

Real Estate License Exam Prep 3rd Ed. (Performance Programs)

National and state portion prep, contracts, agency law, fair housing, and math — the industry standard.

Check Price → Study guide

Modern Real Estate Practice 21st Ed. (Dearborn)

The most widely used real estate principles textbook: principles, law, practice, and math in one volume.

Check Price → Study guide

Real Estate Math Express (Dearborn)

Commission calculations, financing, proration, area, and all exam math explained step by step.

Check Price →

As an Amazon Associate, CJ Affiliate, and AWIN publisher we earn from qualifying purchases. Links above are affiliate links. Full disclosure →