In real estate terminology, fair market value (FMV) represents an estimate of a property’s market value that a buyer would be willing to pay to an unpressured seller. Basically, a property should sell at the stipulated price within a reasonable time period, which is usually one to three months. Also, such an estimate may be founded based on calculations or on the sales of similar properties on the market.
Specifically, determining a property’s FMV is very important to buyers. As a buyer, you normally want to ensure that you are paying a fair price to a home or commercial building that you are interested in. So, how will you determine FMV? Here are two basic steps that you can consider:
- Using a Comparative Market Evaluation or an Appraisal – A comparative market evaluation is a free informal estimate based on the sale prices of comparable properties and is done by a real estate professional.
- Conducting an Appraisal – An appraisal is conducted by a certified appraiser to come up with an accurate estimate based on location, square footage, structural condition, and recent sales of comparable properties
Determining the FMV of your property is also essential when you are selling your home. Most probably, you may have lived in it for years and have paid for its mortgage and for other costs in maintaining it. It is only right that you should receive a reasonable price for it.