Hawaii Pre-Licensing National Practice Exam

What is the term used for the price at which a willing and informed buyer would buy property from a willing and informed seller?

1. Assessed value

2. Market value

3. Appraised value

4. Intrinsic value

The correct answer is: Market value

The term that describes the price at which a willing and informed buyer would purchase property from a willing and informed seller is known as market value. This concept reflects the true value of a property in the current market, influenced by various factors including demand, location, and property condition. Market value is established based on comparative market analyses, which assess similar properties that have recently sold. This ensures that the price reflects what buyers are generally willing to pay under normal circumstances, rather than influenced by external pressures or personal feelings about the property. Assessed value refers to the value assigned to a property by a public tax assessor for the purpose of taxation, and although it might sometimes approximate market value, it is not typically a reliable indicator for sale purposes. Appraised value comes from a formal appraisal conducted by a professional, which may be used in financing but does not necessarily reflect what the property would sell for in an open market transaction. Intrinsic value involves the perceived worth of a property based on personal beliefs or emotional factors and does not necessarily align with market dynamics.