What principle states that a property will sell for the highest price that a buyer is willing to pay?

The principle that states a property will sell for the highest price that a buyer is willing to pay is related to the concept of market demand and buyer psychology, often captured in the principle of supply and demand—which aligns closely with the principle of competition. However, it's the principle of highest and best use that more specifically addresses how a property's potential uses can influence its market value. This principle suggests that a property’s value is maximized when it is utilized in a manner that is most profitable.

When considering how much a buyer is willing to pay, this principle incorporates not just the physical characteristics of the property but also the market conditions and possible alternative uses. Essentially, if a buyer perceives that a property can deliver significant utility or profit when used in a particular way, they may be willing to pay a higher price. Thus, this principle reflects the relationship between the property’s potential use, the competitive marketplace, and the motivations of buyers, ultimately determining the price that reflects both the property's worth and the buyer's expectations.

This understanding can help real estate professionals evaluate properties more accurately and advise clients on pricing strategies based on how potential uses can enhance value in the eyes of buyers.