What is the exam-ready distinction?
| Official syllabus topic | Valuation and Market Analysis: Value, Price, and Cost |
|---|---|
| Official PSI area | Valuation and Market Analysis |
| Published weight | 8% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual comparison. Use the source, document, actor, event, and timing stated in the question before applying a memorized definition.
Side-by-side comparison
Read across each row. The terms are deliberately compared on identical dimensions so the difference remains clear when the exam hides the vocabulary inside a scenario.
| Decision dimension | Market value | Market price | Cost |
|---|---|---|---|
| Meaning | Opinion of the most probable price under stated market conditions | Actual amount paid in a transaction | Expenditure to create, acquire, or reproduce an asset |
| Perspective | Market-supported estimate | Historical transaction fact | Production or acquisition measure |
| Can differ because | Assumptions and effective date | Motivation, financing, relationship, or unusual terms | Labor, materials, entrepreneurial incentive, timing, and obsolescence |
| Exam clue | Should sell | Did sell | Spent to build or acquire |
Decision rule
Georgia-specific distinction
Worked example
Scenario. A seller under severe time pressure accepts $410,000 for a property appraised at $440,000 after $470,000 of construction cost.
Reason it through. The transaction amount is price, the appraisal is an opinion of value, and the production expenditure is cost.
Answer. $410,000 is market price, $440,000 is the value opinion, and $470,000 is cost.
Common exam traps
- Using price and value as exact synonyms
- Assuming cost creates equal value
- Ignoring transaction conditions
- Confusing assessed value with market value
Original practice questions with detailed explanations
These are original instructional questions mapped to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1A seller under heavy time pressure accepts $410,000 for a home. An appraiser had valued it at $440,000, and building it cost $470,000. Which labels are correct?
- A. Price $440,000, value $410,000, cost $470,000
- B. Price $410,000, value $470,000, cost $440,000
- C. Price $410,000, value $440,000, cost $470,000
- D. Price $470,000, value $440,000, cost $410,000
Show answer and explanation →
Answer: C. Price $410,000, value $440,000, cost $470,000
Market price is what was actually paid, market value is the opinion of what the property should sell for, and cost is what it took to build. So $410,000 is price, $440,000 is value, and $470,000 is cost. The plausible error is treating the accepted price as the market value, even though a pressured seller took less.
Question 2Which statement describes market value?
- A. The amount a buyer actually paid for the property in its latest sale
- B. The total spent on land, labor, and materials to build the property
- C. The list price that the seller and listing broker agreed to advertise
- D. The most probable price under stated market conditions on a given date
Show answer and explanation →
Answer: D. The most probable price under stated market conditions on a given date
Market value is an opinion of the most probable price under defined market conditions as of an effective date. The amount actually paid is market price, which can differ because of motivation, financing, or unusual terms. Construction cost measures what was spent, not what the market would pay.
Question 3A Georgia home cost $500,000 to build, but comparable sales support a fair market value of $460,000. Georgia assesses property at 40 percent of fair market value. Ignoring exemptions, what is the assessed value?
- A. $184,000
- B. $200,000
- C. $276,000
- D. $460,000
Show answer and explanation →
Answer: A. $184,000
Georgia property tax starts from fair market value and then applies the 40 percent assessment: $460,000 x 0.40 = $184,000. Using construction cost gives $500,000 x 0.40 = $200,000, the error, because cost is not market value. Subtracting 40 percent instead of taking 40 percent gives $276,000.
Ready to move on?
You have this distinction down when all of these are true.
- Define every compared term without using the other term as the definition.
- Rebuild the comparison table from memory.
- State the decision rule and Georgia distinction without notes.
- Solve the worked example after changing one key fact.
- Explain the rule or fact that makes each distractor wrong.
- Answer all three original questions correctly in mixed practice on a later day.
Recommended next lesson
Continue with Appraisal Versus CMA Versus BPO Versus AVM. Next, appraisal versus CMA versus BPO versus AVM compares the reports that estimate market value, since each gives an opinion of what a property should sell for rather than a record of price or cost.
Return to the complete exam-concept library or the Valuation and Market Analysis hub.