How is liquidation value defined in real estate?

Liquidation value in real estate refers to the estimated amount that an owner can expect to receive from the sale of a property if it needs to be sold quickly, often under less-than-ideal conditions. This often arises in scenarios where a property is foreclosed, in probate, or when an owner is in a situation where they must sell quickly due to financial distress.

This value is typically lower than the market value of a well-maintained property because it takes into account the urgency of the sale and the potential discounts necessary to attract buyers quickly. Therefore, the focus here is on how quickly the sale can be accomplished and the price that could realistically be obtained in such a scenario.

In contrast, the other options refer to different concepts. The market value reflects what a well-maintained property would sell for under normal market conditions, which does not account for the discount typically associated with a quick sale. The price set in a long-term lease is unrelated to the value derived from selling the property, and the original purchase price does not necessarily reflect its current value or liquidation potential. Thus, the definition of liquidation value as the estimated amount received when selling quickly clearly aligns with the correct answer.