Certified Residential Appraiser Practice Exam

Which term describes the most probable price for a property under specific conditions?

1. Investment value

2. Market value

3. Liquidation value

4. Assessed value

The correct answer is: Liquidation value

The most probable price for a property under specific conditions is best described as market value. Market value reflects the price that a property is expected to sell for in a competitive and open market, assuming typical financing and reasonable exposure time. It assesses the value based on what similar properties have sold for, taking into account current market conditions and buyer/seller motivations. Investment value represents the value of a property based on an individual investor's specific circumstances, such as their expected cash flow and returns, which may differ from the general market. Liquidation value pertains to the estimated amount that a seller would likely receive for a property when it is sold quickly under distressed conditions, often resulting in a lower price than market value. Assessed value refers to the value assigned to a property by a governmental unit for tax purposes, which may not accurately reflect the current market conditions or actual selling prices. Therefore, market value is the most appropriate term for the question as it encompasses the typical selling price under normal circumstances in the marketplace.