In real estate, Fair Market Value is the price a property is most likely to sell for on the open market after being exposed for a reasonable period of time. It assumes that both the buyer and the seller are well informed about the property and its potential uses and are acting prudently and in their own best interests.
Fair market value also assumes that neither party is under undue pressure to buy or sell and that the transaction is an arms length transaction. This concept is widely used in appraisals, taxation, financing, and legal matters to establish a property’s true market worth.
