Fair Market Value

Fair Market Value
The price that a given property or asset would fetch in the marketplace, subject to the following conditions:

1. Prospective buyers and sellers are reasonably knowledgeable about the asset; they are behaving in their own best interests and are free of undue pressure to trade.

2. A reasonable time period is given for the transaction to be completed.

Given these conditions, an asset's fair market value should represent an accurate valuation or assessment of its worth.

Fair market values are widely used across many areas of commerce. For example, municipal property taxes are often assessed based on the fair market value of the owner's property. Depending upon how many years the owner has owned the home, the difference between the purchase price and the residence's fair market value can be substantial.

Fair market values are often used in the insurance industry as well. For example, when an insurance claim is made as a result of a car accident, the insurance company covering the damage to the owner's vehicle will usually cover damages up to the fair market value of the automobile.

Investment dictionary. . 2012.

Look at other dictionaries:

  • Fair market value — (FMV) is a term in both law and accounting that is based on the economics term of market value. It is also a common basis for assessing damages to be awarded for the loss of or damage to the property, generally in a claim under tort or a contract …   Wikipedia

  • fair market value — n: a price at which buyers and sellers both having reasonable knowledge of the property and being under no compulsion are willing to do business Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. fair market value …   Law dictionary

  • fair market value — UK US noun [U] (also fair value) COMMERCE ► a price that is neither too high nor too low in relation to the prices of similar things: »They provided data to demonstrate that their bid was at fair market value …   Financial and business terms

  • fair market value — That hypothetical value of a piece of property, given a willing purchaser and a willing vendor, and a reasonable amount of time for the property to be exposed to sale. (Dictionary of Canadian Bankruptcy Terms) United Glossary of Bankruptcy Terms… …   Glossary of Bankruptcy

  • fair market value — The amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. By fair market value is meant the price in …   Black's law dictionary

  • fair market value — noun : a price at which both buyer and seller are willing to do business * * * fair market value, a value established by a buyer with a clear intention to buy and a seller with a clear intention to sell, both of whom are acquainted with market… …   Useful english dictionary

  • fair market value — Actual value or value in money. Re Patton, 227 Wis 407, 278 NW 866, 117 ALR 140. That which property will sell for as between one who wants to purchase and one who wants to sell; in the absence of a ready market and a market price, a constructive …   Ballentine's law dictionary

  • fair market value — The *price of an asset in the context of an *arm’s length transaction in a *free market. Compare *book value and *market value …   Auditor's dictionary

  • fair market value — fair value …   Accounting dictionary

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