What is the significance of “market value” in real estate transactions?

The significance of "market value" in real estate transactions lies in its definition as the estimated price that a property would sell for in the current market under normal conditions. This concept is critical because it encompasses the dynamics of supply and demand, buyer motivation, and seller circumstances. Market value considers various factors, including the property's condition, location, and recent sales of comparable properties, giving both buyers and sellers a realistic expectation of what the property should fetch.

Understanding market value helps stakeholders make informed decisions, as it is a benchmark for pricing properties appropriately rather than basing decisions solely on the seller’s asking price or the costs incurred in improvements. By focusing on market conditions, parties can better gauge the property's worth and engage in negotiations that reflect its true market potential. Thus, option B accurately captures the essence of "market value" and its vital role in the real estate transaction process.