What does Market Value mean?


A commonly accepted definition for Market Value comes from the FannieMae Selling Guide. FannieMae defines Market Value as the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

  • buyer and seller are typically motivated;

  • both parties are well informed or well advised, and each acting in what he or she considers his/her own best interest;

  • a reasonable time is allowed for exposure in the open market;

  • payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

  • the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Ref: FannieMae Selling Guide B4-1.1-01 (12/15/15)

In other words, Market Value is a professional appraiser's opinion based upon a combination of any of the following:

  • The overall cosmetic and mechanical condition of the vehicle.

  • The demand and supply of comparable vehicles.

  • The adjusted value of comparable vehicles advertised or sold recently.

  • On-line value guides.

  • The expertise of the appraiser.

  • The expertise of a recognized expert of the particular type of vehicle appraised that might have been consulted for this assignment

  • Any receipts provided for repairs, expenses, etc.

The market value opinion assumes that the sale will occur with 6 months (i.e. Exposure Time).

The market value is different than intrinsic value or replacement value.

  • Replacement or cost value refers to the amount needed to replace the vehicle in its present state.

  • Intrinsic value is an arbitrary value that an individual may place on an asset, based on their own preferences and circumstances.

It’s important to note that the Market Value changes over time, especially if the vehicle is rare or has been modified. It is recommended that vehicle be reappraised periodically to ensure the market value kept current.

Featured Posts
Recent Posts
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square