What does "fair market value" mean?

Fair market value is defined as the price a property would sell for on the open market, under typical conditions where both the seller and the buyer are acting in their own self-interest, and the property has been exposed to the market for a reasonable period of time. This definition is critical in real estate transactions as it provides a baseline for the value of a property, ensuring that the price reflects what a willing buyer would pay and what a willing seller would accept in an unrestricted market.

This concept takes into account various factors, including the property's condition, location, and the current state of the real estate market. It is important because it helps establish a transparent and equitable pricing mechanism that can support negotiations and pricing strategies.

In contrast, the other options provided do not accurately capture the essence of fair market value. Selling a property to a family member might involve personal considerations that don't reflect the open market's dynamics, thus distorting the true market value. The price set by a property appraiser may reflect the appraiser's subjective assessment and could differ from the fair market value due to various biases or timing considerations. Lastly, the highest price a buyer is willing to pay does not necessarily represent fair market value, as it might be influenced by individual emotions or bidding wars