How does price differ from value in a real estate transaction?

In a real estate transaction, the distinction between price and value is fundamental to understanding market dynamics. Price refers specifically to the amount of money that is actually paid or agreed upon in a transaction. This figure is influenced by various factors, including negotiation, market conditions, and buyer and seller motivations.

Value, on the other hand, represents an estimation of worth. It encapsulates the potential or perceived benefits of a property, often determined through various valuation methods such as comparative market analysis or appraisals. Value can be subjective and varies depending on individual perspectives and market conditions.

Thus, the statement that price is what is paid while value is an estimation of worth accurately captures this difference. Price is a concrete figure; value is abstract, encompassing a broader perspective on what a property is believed to be worth in its market context.