Market Value Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Market Value, written in plain English, along with examples of how it is used.
What is Market Value?
(n) Market price is the value of a property or article , which it will fetch if sold then, under the circumstances and conditions prevailing in the market. Market value is the normal price a good may get when external influence affecting the salability is not existing.
History and Meaning of Market Value
Market value is a term commonly used in business and real estate that refers to the value of a property or asset in the open market. The concept of market value has its roots in the economic theory of supply and demand. It is a theoretical concept that assumes that in a free and open market, the price of an asset will be based on the perceived value of the asset by all buyers and sellers.
Examples of Market Value
- A homeowner has their house appraised to determine its market value before putting it up for sale.
- A company values a piece of machinery at its current market value when considering selling it or using it as collateral.
- A stock investor purchases shares of a company at market value based on the current market conditions and trends.
- An insurance company calculates the market value of a totaled vehicle to determine the amount of compensation to the policyholder.
- A city government assesses the market value of a property to determine property taxes owed by the owner.
Legal Terms Similar to Market Value
- Fair market value - an amount that would be agreed upon between a willing buyer and a willing seller, with neither being compelled to buy or sell, and both having reasonable knowledge of the relevant facts.
- Appraisal - an estimate of the market value of a property or asset, typically done by a professional appraiser.
- Liquidation value - the estimated value of an asset if it were to be sold quickly at a fair price, typically done during a company's bankruptcy or insolvency.