posted on 06-06-2019

Fair Market Value

Updated October 1, 2019

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 market, 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.


Read This Next

5 Credit Cards That Will Pay You Hundreds Just For Signing Up (2020)
What's even better than earning rewards for spending on your credit cards? Getting paid hundreds of ...
The Top 4 Balance Transfer Credit Cards for 2020
Tired of dragging credit card debt around with you? Taking 15 minutes to transfer your debt to a cre...
The 5 Best Rewards Credit Cards for 2020
If you're going to spend money anyway, then why not get paid for it? Whether you're looking for c...

Related Definitions

Sale
A sale is the transfer of title to a piece of property or performance of a service in return for compensation. In the retail world, a sale means a temporary... See More
Stock
Stock, also known as equity, represents ownership interests in corporations. Whether you own one, 100 or 100 million shares of stock in a company, you're... See More
Bond
A bond, also known as a fixed-income security, is a debt instrument created for the purpose of raising capital. They are essentially loan agreements between... See More

Popular Articles
Investing
Financial Statement Analysis for Beginners
Investing
15 Financial Ratios Every Investor Should Use
Investing
Calculating Internal Rate of Return Using Excel or a Financial Calculator
Personal Finance
5 Common Sense Lotto Realities Everyone Ignores
Loans
How to Calculate a Monthly Loan Payment in Excel (Mortgage, Car Loan, and More)
Loans Calculator
Loan Interest Calculator: How Much Interest Will I Pay My Lender?
Investing Calculator
Simple Savings Calculator: How Much Could I Save Up Over Time?
Investing Calculator
Million Dollar Savings Calculator: How Much Do I Need To Save to Become a Millionaire?
Loans Calculator
Car Loan Calculator: What Will My Monthly Principal & Interest Payment Be?
Mortgage Calculator
Mortgage Calculator: What Will My Monthly Principal & Interest Payment Be?
Copyright © 2020. InvestingAnswers, Inc. All Rights Reserved