Fair Market Value

The term “fair market value” is defined as the price that would be paid for an asset by a willing buyer when neither party is under any compulsion to buy or sell and both parties have reasonable knowledge of all relevant facts.

In order to determine the fair market value of an asset, buyers and sellers must take into account a number of factors, including its useful life, its risks and rewards, its supply and demand, and its potential for appreciation or depreciation.