What term describes the principle that appraises real estate according to market influences?

The correct answer is "Market Value." This term refers to the estimated amount for which a property should sell in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably. It directly reflects the influence of market forces, including supply and demand, on property values.

Market value takes into account various market dynamics that can affect transactions, such as economic conditions, interest rates, and the specific characteristics of the property itself. Understanding market value is crucial for appraisers, buyers, and sellers because it sets the foundation for assessing a property's worth in a given market environment.

The other terms, while related to the discussion of real estate, do not specifically define the principle that directly evaluates properties based on market influences. For instance, supply and demand describe the broader economic factors that affect market trends but do not serve as a defined value assessment like market value does. Investment value focuses on the specific value to a particular investor based on their individual circumstances and does not necessarily reflect broader market conditions. The cost approach is a method of valuation that estimates the value based on the cost to replace or reproduce the property, again not directly tied to current market conditions.