What does the term 'market price' refer to in real estate?

The term 'market price' in real estate specifically refers to the price that is agreed upon by the buyer and seller during a transaction. This reflects the actual amount that the parties are willing to exchange for the property, taking into account various factors such as negotiation, market conditions, and the perceived value of the property.

This concept differs from other terms used in real estate, such as listing price, which is the initial price set by the seller when marketing the property. Additionally, the average value of similar properties, often referred to as market value or comparable sales, may inform buyers and sellers but does not dictate the specific transaction price. Lastly, potential value based on improvements relates to the future worth of a property after renovations, which can influence negotiations but does not define the agreed transaction price. Therefore, the correct understanding of market price centers on the actual agreement reached between the buyer and seller, reflecting real-world conditions and negotiations.