What is meant by "market value"?

Market value refers to the price at which a property would sell in a competitive and open market, assuming both the seller and buyer are acting in their own best interests. It represents an objective measure where a willing buyer and a willing seller come to an agreement without undue pressure or coercion. This concept is fundamental in real estate as it reflects the most accurate representation of a property's worth based on current market conditions, demand, and supply.

The other choices do provide insights into various aspects of property valuation, but they do not encompass the comprehensive definition of market value. The estimated worth of a property based on its improvements could capture the intrinsic value of upgrades but does not account for market dynamics and buyer-seller negotiations. The assessed value determined by local tax authorities relates more to taxation than a free market sale and can differ substantially from actual market value. Lastly, calculating value based on future income potential highlights the income approach to valuation, which is relevant for investment properties but does not define market value in terms of current transaction conditions. Overall, the first option best aligns with the established definition of market value in real estate practice.