How does market value differ from assessed value?

Market value represents the amount for which a property would sell in a competitive and open market, taking into account current conditions, buyer demand, and property characteristics. It essentially reflects the potential sales price if the property were to be sold at that moment. On the other hand, assessed value is determined for the purpose of taxation and is often a percentage of the market value. It is used by local governments to establish property tax bills, and the methods of arriving at assessed values can vary widely between jurisdictions.

The distinction is important as market value is an indicator of the actual economic conditions affecting property sales, whereas assessed value is more of a regulatory tool designed for fair taxation. Thus, option A effectively captures the fundamental difference between these two concepts, highlighting their purposes and how they relate to property transactions and taxation.