In broad terms, the fair market value refers to the price of an asset on the free market. Ideally, fair market value should be an accurate estimation of the asset's worth. Tax law and the real estate market are two areas where you will find this term.
There are certain conditions the asset should meet to be considered having a fair market value. All parties involved should know the specifics of the asset, should act in their own best interest and without being unnecessarily pressured.
The fair market value is significant in taxation law and the real estate market as it can ensure a fair process in both cases.
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