fair market value

noun

Updated on: 19 Apr 2018

Definition of fair market value

: a price at which buyers and sellers with a reasonable knowledge of pertinent facts and not acting under any compulsion are willing to do business

Recent Examples of fair market value from the Web

State law requires governments to pay fair market value when exercising eminent domain.

— rick romell, Milwaukee Journal Sentinel, "Mount Pleasant offers Foxconn-area homeowners 40% over market value," 7 Feb. 2018
Louisiana law requires parish assessors to re-evaluate all property every four years to reflect changes in fair market value.

— kim chatelain, NOLA.com, "Mandeville City Council debates higher property taxes," 23 Mar. 2018
Bauman told council members that one city parcel, a parking lot, is being sold for $40,000, which reflects its fair market value.

— tom daykin, Milwaukee Journal Sentinel, "Near West Side Partners agrees to pay for city-owned development site, ending conflict," 6 Feb. 2018
Home equity is the difference between the home's fair market value and the outstanding balance of all liens on the property.

— melissa rolland, courant.com, "The Benefits Of Owning A Home," 13 Mar. 2018
Anything paid above the fair market value will be a tax-deductible gift to the symphony, according to the rules on its website.

— domenica bongiovanni, Indianapolis Star, "John Williams comes to Indy: Ticket availability and what you need to know," 8 Feb. 2018
Private landowners must be reimbursed at a fair market value—though the value of property rights deep underground is unclear.

— nicole goodkind, Newsweek, "Trump Infrastructure Plan Includes Elon Musk-Style High-Speed Rail Tunnels And Eminent Domain," 5 Jan. 2018
The Internal Revenue Service has ruled charities cannot give donor lists to politicians but can rent them at fair market value if made available to all candidates.

— The Seattle Times, "Gardner’s use of private firm for investigation questioned," 27 Feb. 2018
The city could wind up paying more to the property’s former owners, the Henderson Group development company and related entities, if a panel to be convened by the Delaware County Court of Common Pleas determines that its fair market value is higher.

— jacob adelman, Philly.com, "Philadelphia airport, in effort bolster shipping, buys more land," 12 Feb. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'fair market value.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of fair market value

1891

Financial Definition of FAIR MARKET VALUE

fair market value

noun

What It Is

Fair market value is the price at which a willing seller sells a good or service to a willing buyer.

How It Works

Let's assume John Doe wants to sell his house. He lists it for $750,000. Jane Dale wants to buy a house. She sees John's house for sale and offers him $675,000. The two negotiate the price and agree on $700,000. Because it is the price John and Jane agree to, the fair market value of the house is $700,000.

Why It Matters

People often feel that houses, art, stocks, bonds and other items are "worth" a certain amount on the market, but the only true measure of worth -- the fair market value -- is the price at which someone is willing to sell and someone is willing to buy.

Source: Investing Answers