Fair Market Value (FMV): What Is It and How Do You Calculate It?

All the fun memories you’ve enjoyed in your home are priceless. But the house itself will get a certain price when you sell it, often based on its fair market value (FMV). But what is fair market value? How is it determined? And how is it different from market value or appraised value? To get you the best answers, we asked an award-winning real estate agent and a certified residential appraiser for insight. With their expertise and our extensive research, this post provides the answers you’ll need before you sell your home. Get a Free Home Value Estimate Enter a few details about your home, and we’ll provide you with a preliminary estimate of value in less than two minutes. This won’t replace a comparative market analysis (CMA) or home appraisal, but it can be a helpful starting point. What is fair market value? The official definition of FMV used by the Internal Revenue Service states, “Fair market value is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.” Put simply, it refers to the price a home would sell for if both the buyer and seller genuinely want ...