What does "Fair Market Value" signify?

Fair Market Value (FMV) signifies the price at which a property would sell under normal conditions, assuming both the buyer and the seller are informed, willing, and not under any undue pressure. This concept relies on an open market scenario where the property is listed for sale and potential buyers can freely negotiate the price.

In the context of real estate, FMV is determined by various factors, including comparable sales, current market conditions, and the specific characteristics of the property itself. It reflects what a willing buyer would pay and a willing seller would accept, making it a crucial measure for appraisals, taxation, and real estate transactions.

The other options do not accurately define FMV. The price set by the seller may not align with what the market would consider fair. The average price of homes in the area may indicate market trends but does not represent the value of an individual property. The value assigned by local taxes often differs from FMV and is based on governmental assessments rather than market-based transactions.