What does fair market value imply?

Fair market value refers to the price that a property would likely sell for in an open market under typical conditions, where both the buyer and seller are acting prudently and without undue pressure. This concept captures the idea that the transaction is conducted transparently, allowing for a fair exchange based on current market conditions.

The definition is rooted in the principle of supply and demand, considering factors like location, property condition, and comparable sales in the area. By reflecting a realistic price that both parties agree upon, fair market value serves as an essential benchmark in real estate transactions, appraisals, and taxation.

Recognizing the nuances of fair market value is crucial for both buyers and sellers, as it helps foster informed negotiations and promotes trust in the real estate market.