Market value is a definition, not an opinion of price.

“On the valuation date.” Value is always at a date. A valuation is not a standing statement about a property; it is an opinion about one day. This is why retrospective valuations are possible and why a report does not “expire” so much as become historic.

“Willing buyer and willing seller.” Both are hypothetical and both are willing — neither is anxious, and neither is being forced. A mortgagee sale, a deceased estate cleared quickly, or a divorce settlement under time pressure may produce a lower price than market value, precisely because a party was compelled.

“Arm’s length transaction.” No relationship between the parties affecting the price. A transfer to a family member at a discount is a real transaction but not evidence of market value — which is exactly why revenue offices substitute market value on related-party transfers.

“After proper marketing.” The property has been exposed to the market for a reasonable period, in the usual way, to the usual audience. A property sold in three days off-market to one buyer has not necessarily achieved market value — in either direction.

“Knowledgeably and prudently.” Both parties are assumed to be reasonably informed about the property and the market. A price paid by an uninformed buyer who later discovers a defect is not the benchmark.

Price is what was actually paid in a particular transaction. It is evidence of value, but a single price is one data point produced by two specific parties on one day — which may or may not have satisfied the conditions above.

Cost is what it took to create the asset — land plus construction, fees and finance. Cost and value diverge constantly: a poorly conceived renovation can cost $200,000 and add far less; a well-located modest house can be worth well above its replacement cost. Insurance works on cost, not value, which is why a replacement cost assessment is a different document.

Statutory land value — the site value or unimproved value on your rates or land tax notice — is a mass-appraisal assessment of the land as if vacant, at a date the relevant Act fixes. It is not the market value of your property and should never be used as one.

Valuation, appraisal, bank valuation and estimate

For residential property the primary method is direct comparison: identify sales of genuinely comparable properties around the valuation date, analyse them, then adjust for the differences that matter — land area, building area, condition, aspect, position within the street or complex, and any legal or physical constraint on the title.

The adjustment is the work, and it is the part a report has to show. Two valuers with the same five sales can reasonably reach slightly different figures; neither is wrong if each has explained the reasoning. A figure presented without the comparables and the adjustments is not a valuation — it is an assertion, and it is the first thing a reviewer, auditor or cross-examiner attacks.

Where the property is unusual, or the market is thin, other methods support the comparison — a summation approach for rural holdings, a capitalisation approach where the property is genuinely income-producing. The basis of value stays the same; the route to it changes.

What a report must contain, with primary sources

What is the definition of market value?

Market value is the estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing, where the parties each act knowledgeably, prudently and without compulsion. It is a defined basis of value used across Australian valuation practice and reflected in the International Valuation Standards, rather than a personal opinion of asking price.

Is market value the same as the sale price?

No. A price is what two specific parties actually paid on one day. Market value assumes a willing buyer and willing seller, no relationship between them, proper marketing and no compulsion. A mortgagee sale, a rushed estate clearance or a discounted transfer between family members can all produce prices well away from market value, which is why a single transaction is evidence of value rather than proof of it.

Is market value the same as the land value on my rates notice?

No. The figure on a rates or land tax notice is usually a statutory site value or unimproved value — a mass-appraisal assessment of the land as if vacant, at a date the relevant Act fixes. It excludes your dwelling and every other improvement, and it is produced by a different exercise from an individual market valuation. Using it as market value will understate the property, often substantially.

Why can two valuers reach different figures?

Because valuation is the formation of an opinion from evidence, and the adjustments between comparable sales involve judgement. Two competent valuers analysing the same sales can reasonably differ, usually modestly. What distinguishes a defensible report is not that the figure is uniquely correct but that the evidence, the adjustments and the assumptions are set out so the reasoning can be followed and tested.