What Is the Difference Between the Market Value Total & the Market Improvement Value?

In the real estate field, the market value total and market improvement value are key terms. Keeping up to date with current property trends in the retail market helps ensure owners and buyers get the best possible deal.

According to the Federal Deposit Insurance Corporation (FDIC), market value is defined as "the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus."

In the real estate field, the market improvement value is derived based on the type, cost of improvement and potential value increase when improvements are made to a property. The resale value of a home can fluctuate due to economic conditions and location of the property. According to Remodeling.com, a cost-to-value ratio might not always end up with a profit if the real estate market is unstable.

The main difference between the the market value and market improvement is the rate of appreciation. The market value can change due to things such as the economy and location of the property. Market improvement value varies because of the actual physical changes to the property that can either increase or decrease the value. According to SmartMoney, even if you improve your property, it does not automatically mean the market value total of the property increases.