Market-Based Valuation is a method used to determine the value of an asset or company by comparing it to similar entities in the market. This approach relies on the principle of supply and demand, where the value is influenced by how much investors are willing to pay for comparable assets. Common techniques include using price-to-earnings ratios or analyzing recent sales of similar companies. This valuation method is particularly useful in real estate and stock markets, where numerous comparable transactions provide a clear benchmark. By examining these market indicators, investors can make informed decisions about buying or selling assets based on current market conditions.