How is a property's market value typically determined?

Market value of a property is primarily determined through the process of comparison with similar properties in the area, commonly referred to as the comparative market analysis (CMA). By analyzing recently sold properties with similar characteristics, such as size, location, and features, real estate professionals can arrive at a fair market value for the property in question. This ensures that the valuation reflects current market conditions and buyer behaviors, rather than relying on subjective measures or outdated data.

For instance, if several houses in a neighborhood of similar size and condition have sold within a certain price range, the property being evaluated will likely be valued within that same range, adjusted for its unique attributes. This method is grounded in the principle that a property's value is influenced by supply and demand, which is best understood through current listings and sales in the localized market.

In contrast, relying on an owner’s expectations might introduce bias, as they may overestimate the value based on emotional attachment or personal investments. Current national housing trends could provide a broader context but may not accurately reflect localized market dynamics, and using historical taxation rates would not inform the current market value, as they do not take into account changes in market conditions, property improvements, or shifts in buyer interest.