What is Fair Market Value?
Fair market value is the price at which a willing seller sells a good or service to a willing buyer.
Example of Fair Market Value
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 does Fair Market Value matter?
People often feel that houses, art, stocks, bonds and other items are "worth" a certain amount on the , 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.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
They don't involve soaring ACT scores, sky-high grades or applications listing every activity from band to soup-kitchen volunteering. Yet these seven scholarship tactics can be astonishingly...Read More →
Each week, one of our investing experts answers a reader's question in our InvestingAnswers' Q&A column. It's all part of our mission to help consumers...Read More →