What is a key characteristic of fair market value?

Fair market value is defined as the price that a property would sell for on the open market, assuming both the buyer and seller are informed and willing participants in the transaction. A key characteristic of fair market value is that it requires reasonable knowledge of the relevant facts. This means that both parties involved must have sufficient information about the property, including its condition, comparable sales, and other pertinent factors that could influence its value.

Having reasonable knowledge of these facts ensures that the transaction reflects an honest agreement between a willing buyer and a willing seller, without any undue pressure or misinformation. This makes the assessment of fair market value much more reliable and accurate, as it is based on informed decisions rather than assumptions or external influences.

The other characteristics mentioned do not accurately capture the essence of fair market value. It is not strictly determined by the government, nor does it simply reflect a seller's asking price or current market trends without considering the information available to both parties. Understanding the relevance of informed participants is crucial in comprehending fair market value.