fair market value

noun

Updated on: 16 May 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

The tax would value her stocks, bonds, and property as the price on the day before her official exit and impose levies on them based on fair market value.

— amanda garrity, Good Housekeeping, "Meghan Markle’s American Citizenship Could Majorly Complicate Her and Harry's Taxes," 3 May 2018
Mike's father just died and left him and his two sisters an inheritance — the father's home, which had a fair market value of $120,000.

— susan tompor, Detroit Free Press, "Save the family RV by cutting elsewhere? Maybe, if kids get their way," 27 Apr. 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.

— samuel chamberlain, Fox News, "Missouri Gov. Greitens accused of wrongdoing over charity donor list," 17 Apr. 2018
Some of the companies that pay below market rates [set under the Copyright Act] are now established and should pay a fair market value.

— robert levine, Billboard, "Recording Academy Celebrates 20 Years of Advocacy In Washington D.C.," 16 Apr. 2018
Homeowners will be paid fair market value or about $128,000 for each house, on average.

— alex demarban, Anchorage Daily News, "$15 million in spending bill a ‘dream come true’ as Alaska village plans move," 26 Mar. 2018
Mount Pleasant now will offer 40% more than fair market value — as determined by the homeowners’ appraisers.

— rick romell, Milwaukee Journal Sentinel, "Mount Pleasant offers Foxconn-area homeowners 40% over market value," 7 Feb. 2018
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

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

in the meaning defined above

See Words from the same year

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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

Law Dictionary