How is "fair market value" defined?

Fair market value is defined as the price at which a property would sell in a competitive and open market. This definition indicates that the transaction occurs between a willing buyer and a willing seller, both of whom are knowledgeable about the property and the market conditions. The transaction must take place without any undue pressure or coercion on either party, reflecting a true market scenario.

This definition encompasses several key elements: the presence of open competition, the voluntary nature of the transaction, and the consideration of an informed buyer and seller. These factors ensure that the price reflects what the property is actually worth in the current market, taking into account factors like demand, location, condition, and comparable sales.

In contrast, the other definitions do not encompass these critical aspects of open market transactions. The highest price a seller will accept does not necessarily reflect the fair market value, as it can be influenced by individual circumstances and may not indicate what buyers are willing to pay. The average price across multiple sales may not account for individual property conditions and market variations. As for the amount a tax assessor estimates, this figure is typically based on different criteria intended for taxation purposes rather than reflecting true market conditions and buyer-seller dynamics. Thus, fair market value is best represented by the scenario in