Fair market value is the price that a buyer and seller agree to for a given asset or property. In real estate, the fair market value is immediately established when there is a firm sale price on a property.
In instances where a sale is not taking place, fair market value may be determined through an independent evaluation process. A third party, usually an appraiser, will consider the property’s location, size, and condition, along with any recent comparable sales in the area, to establish a competitive price that someone would be willing to pay for the property in the open market.