The listing broker representing a seller completes a CMA and suggests a listing price of $425,000. The seller agrees to list the property and have the broker market it for $425,000. There are multiple offers on the home, and the seller accepts an offer for $474,000. The sale closes. What is the market value of the home?

Rationale

$474,000 is the market value of the home.

The market value of a property is typically defined as the price at which it sells in an open market. In this case, the seller accepted an offer for $474,000, which represents the amount a buyer was willing to pay for the home, thus establishing its market value.

A ($474,000) CORRECT

This amount reflects the actual sale price that the seller accepted for the property. It represents the consensus of value between a willing buyer and a willing seller in the context of a competitive market, making it the best indicator of the home's market value.

B ($495,000) YOUR ANSWER

This figure does not represent any transaction related to the property and is not supported by any offer or agreement made during the sale process. It could be seen as an arbitrary number without basis in the actual market conditions or buyer interest.

C ($475,000) YOUR ANSWER

While this number is close to the sale price, it does not accurately reflect the accepted offer. The actual accepted offer was $474,000, making $475,000 an incorrect representation of the home's market value.

D ($425,000) YOUR ANSWER

This amount was the initial listing price suggested by the broker and agreed upon by the seller. However, it does not reflect the actual market conditions or final sale price, which is determined by the accepted offer of $474,000.

Conclusion

In real estate, the market value of a property is best indicated by the price at which it is sold, rather than its listing price or any estimated values. In this scenario, the accepted offer of $474,000 clearly establishes the market value, as it represents what a buyer was willing to pay in a competitive environment. Understanding this distinction is crucial for accurately assessing property values in real estate transactions.

$474,000 is the market value of the home.

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