Fair Market Value
Fair Market Value (FMV) refers to the price an asset would sell for on the open market, assuming both the buyer and seller are knowledgeable, willing, and not under any pressure to complete the transaction. It reflects what a reasonable person would pay for the item in its current condition, considering factors like market demand, comparable sales, and economic conditions. Essentially, it’s a balance of supply and demand that helps determine a fair price in transactions, such as real estate, stocks, or personal property.
Additional Insights
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Fair market value is the estimated price at which an asset would change hands between a willing buyer and a willing seller in an open market. It assumes both parties have reasonable knowledge of the relevant facts and are not under any pressure to make the transaction. This value reflects what the asset would typically sell for in its current condition, considering factors like demand, location, and comparable sales. Fair market value is commonly used in real estate, taxation, and financial reporting to provide a realistic assessment of worth.