Fair market value denotes the likely price at which a well-informed buyer and a willing seller exchange an item under normal conditions, absent coercion. It reflects objective equilibrium between supply, demand, and inherent attributes—like location or condition. Buyers draw on comparable sales, economic indicators, and expert insights to gauge if a proposed figure meets this standard.

Key Points:

• No Unusual Pressure: Neither side is forced to transact or given skewed information.
• Comparable Data: Often involves analyzing recent deals for analogous assets.
• Objective Benchmark: Used by insurers, lenders, and tax authorities to confirm valuations.
• Fluctuations: Market cycles or external events can push fair value up or down.

Fair market value underscores rational pricing, keeping negotiations aligned with realistic expectations and preventing unfair overpricing or undervaluation.