What does "Competition" refer to in the context of real estate?

In the context of real estate, "Competition" primarily refers to the interactive efforts of potential purchasers or tenants in the market. This concept highlights how buyers and renters compete against one another to secure properties, which can influence pricing, availability, and the overall dynamics of the market. When many buyers or tenants are interested in the same property, it can lead to bidding wars or increased urgency, ultimately affecting the property's market value.

This competitive environment drives market trends and can impact how long a property stays on the market, as well as the terms of sale or lease agreements. Understanding this aspect of competition is crucial for appraisers, as it helps them analyze market conditions and property values accurately.