Which is NOT a driver of market value?

Which is NOT a driver of market value?

• A. Comparable sales in the open market.
• B. Physical condition and location.
• C. The investor's required rate of return and risk preferences.
• D. Current rents and operating expenses for the property.

Answer: (C)

Market value comes from what buyers in the market are willing to pay based on solid market evidence and property fundamentals. Recent comparable sales anchor prices because buyers use similar properties as a benchmark. The physical condition and location matter because they influence desirability and the property’s ability to attract tenants or generate use value. Current rents and operating expenses feed into the property's income potential, affecting the return a buyer can expect and, in turn, the price someone is willing to pay. The investor’s required rate of return and risk preferences, while important to a specific buyer’s decision, do not set the market price for properties in general. They reflect an individual investor’s criteria and can influence whether a particular buyer will bid a certain amount, but they’re not a market-wide driver of value.

Market value comes from what buyers in the market are willing to pay based on solid market evidence and property fundamentals. Recent comparable sales anchor prices because buyers use similar properties as a benchmark. The physical condition and location matter because they influence desirability and the property’s ability to attract tenants or generate use value. Current rents and operating expenses feed into the property's income potential, affecting the return a buyer can expect and, in turn, the price someone is willing to pay.

The investor’s required rate of return and risk preferences, while important to a specific buyer’s decision, do not set the market price for properties in general. They reflect an individual investor’s criteria and can influence whether a particular buyer will bid a certain amount, but they’re not a market-wide driver of value.