Market Price vs Market Value in Real Estate

By Alexander Prewitt

Alexander is a Tucson native. He is a University of Arizona Alumnus and a devoted Wildcat fan. His experience in Real Estate over the last 11 years covers all aspects of residential Real Estate including listing agent, buyer's agent, and also working with distressed properties such as short sales and foreclosures.

Understanding the distinction between market price and market value is crucial for anyone involved in the real estate surrounding, whether you’re buying or selling a home. To illustrate this concept, let’s take a fun example from the world of consumer goods. Think about the hype surrounding a new gaming console or the latest iPhone release—initially, these products command a premium price due to high demand, but that doesn’t necessarily reflect their true value.

Similarly, in real estate, market price refers to what buyers are willing to pay at a given time, influenced by factors like demand and competition. However, market value is the actual worth of the property, considering its condition, location, and comparable sales. This distinction became particularly evident during the frenzied market conditions of 2021 and 2022, when buyers were often paying significantly above the perceived value of homes.

“Market price refers to what buyers are willing to pay at a given time.”

For those entering the real estate market, whether as buyers or sellers, it’s essential to partner with a knowledgeable professional who can explain the difference between market price and market value. By understanding this dynamic, you can make informed decisions and potentially understand the market fluctuations to your advantage. So, whether you’re eyeing a new home or preparing to sell, remember the importance of discerning between what the market will pay and the actual value of the property in question.

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