Which of the following describes the concept of 'market value'?

Market value is defined as the price that a knowledgeable and willing buyer would pay to a knowledgeable and willing seller in an open and competitive market. This reflects the true economic value of a property based on current market conditions, rather than subjective perceptions or arbitrary valuations.

When considering this definition, a buyer’s willingness to pay is critical because it takes into account both the buyer's financial capacity and their perception of the property's worth. It embodies a real transactional scenario rather than theoretical or artificially inflated figures associated with other options.

The other options do not fully capture the concept of market value. The value assigned by the property owner can often be subjective and does not necessarily align with what the market dictates. The estimated price based solely on property features disregards external factors such as market trends, demand, and competition. Lastly, the average price of properties in the area does not reflect individual property characteristics or buyer/seller dynamics, making it an incomplete measure of market value.