Definition of "Fair market value"

Magnolia  Chavez de Moya real estate agent

Written by

Magnolia Chavez de Moyaelite badge icon

Magnolia Tree Realty

The definition of Fair Market Value in the real estate business is the highest amount that could be received on the sale of a property when there are a willing buyer and a willing seller. But that seems kind of vague, right?

Let’s give Fair Market Value some context:

Truth is whenever a home seller says “I want to sell my house!”, both the home seller and the real estate agent wants to sell the property for the highest price they can, right? However, the home buyer, obviously, wants to buy the house for the lowest price he/she can. So, an “arm wrestling match” regarding the value of the property begins. At the end of that negotiation, when the home seller and the home buyer agree on a price, we have the Fair Market Value of that estate.

Things you should be on the lookout to define a precise Fair Market Value of a property:

- How is the market right now? Do a Comparative Market Analysis.

- Is the house in good conditions? Have a professional Appraisal of the property done.

- How much would it cost to build a new one just like yours? Try the Replacement Cost Approach.

RealEstateAgent.com ADVICE:

Now that you’ve done your homework regarding Fair Market Value the choice is yours: you can either access our Real Estate Agent Directory and search our amazing database for that trustworthy real estate agent that will help you make your house sell, or you can keep searching for other terms on our Real Estate Glossary box below. Good luck!

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

A binding arbitration is a way to solve disputes without going to court. An alternative to the more expensive and lengthy legal procedures, a binding arbitration is basically the process ...

Court order granted in favor of the landlord to remove a tenant from the property because of nonpayment of rent and/or damaging the property. The writ directs an officer of the law to ...

A method widely used for evaluating real estate projects. Under the net present value method, the present value (PV) of all cash inflows from the project is compared against the initial ...

A legally transferable debt instrument by which the issuer agrees to pay the payee within a certain time period. Note usually pay a specified rate of interest tied to the market rate of ...

If you are a real estate investor and you come across this term, you might wind up wondering … What is the operating expense ratio? The operating expense ratio (OER) is a way for ...

An idiomatic expression indicating the desire of an individual to understand new surroundings and all of its nuances including its quality and character. The derivation of the expression ...

Large, high-volume food store where customers serve themselves by going through the aisles and selecting their groceries to be paid at the cash register on the way out. ...

Funds that are retained in an account until a certain event occurs. For example, a downpayment on a contract held until full payment is received whereupon the holding funds are credited to ...

Legal right or privilege, such as that arising from a contract, to use land owned by another person or business for a specific purpose. The use should be reasonable for the circumstances. ...

Popular Real Estate Questions