What is the term for when a buyer pays more for real property than its worth due to its location?

The term most commonly used to describe a situation where a buyer pays more for real property than its actual worth due to its location is "subjective value." This concept acknowledges that the perceived worth of a property can vary from person to person, heavily influenced by individual preferences, specific desires, or particular situations related to a property's location.

For instance, a buyer might pay a premium for a house in a coveted neighborhood because of its proximity to schools, parks, or a vibrant community, even if the property itself does not possess features justifying that higher price in terms of traditional market analysis. Subjective value emphasizes how personal or emotional factors can lead to a perceived value that exceeds objective assessments based on comparable sales or intrinsic qualities of the property.

Market value reflects the price a willing buyer would pay and a willing seller would accept under normal conditions, which is not necessarily higher than the property’s appraised or intrinsic value. Likewise, intrinsic value focuses on the fundamental worth of the property based on its features and attributes, independent of market fluctuations, while utility value relates to the usefulness or practicality of the property in meeting specific needs. Therefore, none of these terms completely encapsulate the phenomenon of paying above market value specifically due to location preferences as effectively as subjective value