Fair Market Value Legal Meaning and Definition

Here is a simplified definition of the legal term Fair Market Value.

Fair Market Value (noun): The price a buyer would willingly pay for a property and a seller would willingly accept, in an open and competitive market. This value differs from replacement value, which refers to the cost to replace or recreate the item. Fair Market Value is typically determined by comparing sales prices of similar properties in the same area, while also taking into account differences in size, quality, and condition.