Fair Market Value is defined as?

Fair Market Value is defined as?

• A. Price Willing Seller And Buyer Negotiate In Open Marketplace
• B. Book Value
• C. Appraised By Bank Only
• D. Tax Basis Value

Answer: (A)

Fair Market Value is the price at which an asset would change hands in an open market between a willing buyer and a willing seller, both having reasonable knowledge of relevant facts and not under compulsion to act. This definition means FMV reflects a real market transaction, not what’s on a lender’s appraisal, not the asset’s book value, and not the tax basis. In practice, the someone willing to sell and the someone willing to buy negotiate a price that reflects current market conditions, making this option the correct representation of FMV. The other options describe values based on accounting books, lender-specific appraisals, or tax costs, none of which capture the market-driven, arms-length price that FMV represents.

Fair Market Value is the price at which an asset would change hands in an open market between a willing buyer and a willing seller, both having reasonable knowledge of relevant facts and not under compulsion to act. This definition means FMV reflects a real market transaction, not what’s on a lender’s appraisal, not the asset’s book value, and not the tax basis. In practice, the someone willing to sell and the someone willing to buy negotiate a price that reflects current market conditions, making this option the correct representation of FMV. The other options describe values based on accounting books, lender-specific appraisals, or tax costs, none of which capture the market-driven, arms-length price that FMV represents.