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Fair Market Value
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Fair Market Value

The amount an article (such as property or an automobile) would sell for on the open market, barring any constraints such as a need to sell or buy quickly. The fair market value for real estate is often determined by examining the range of selling prices for similar homes in the current economic climate.

More On Fair Market Value

The fair market value is the amount an article (such as property or an automobile) would sell for on the open market, barring any constraints such as a need to sell or buy quickly. The fair market value for real estate is often determined by examining the range of selling prices for similar homes in the current economic climate.

The fair market value of real estate is the price on which a fully-informed buyer and a seller agree when there is no undue pressure on either party. The transaction must take place at arm’s length.  (This means the parties are exchanging things of roughly equal value and the business is conducted as if there is no personal relationship between buyer and seller.)  

For a real estate transaction, fair market value can be determined by the selling prices of comparable properties in the surrounding area. Real estate appraisers are trained to evaluate similar properties, adjusting for differences in size, condition, age, location and other factors.