Definition Of Fair Market Value
Fair market value is a term related to the real estate world and it is used legally and commercially in business. The price under fair market value is determined between the buyer and the seller and they arrive at something called the fair market price. It is also used by accountants and appraisers to figure out the fair market price of a property.
A fair market value often depends on the market value for the property, the actual value of the property and also finally on the price agreed upon between the buyer and the seller.
Fair market price helps to determine a fair value for the property without giving scope for unreasonable bargaining. As per legal terms, the definition of fair market value is valid only when both the parties agree legally.
Usually it represents the highest price a buyer is willing to pay and the seller is willing to accept. It is not something that can be forced upon by various factors like the economic situation of the either parties. Also, there are no professional parties that play a role in price determination and it is mainly done on the discretion of the buyer and the seller.
Fair market value is often decided after bargaining and denotes that the amount determined is the highest a buyer is willing to pay and the lowest a seller is willing to accept. So, it is often looked at as a balanced form of pricing where both parties are satisfied with the out come of the negotiation.
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