Fair Market Value

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Fair Market Value

The amount for which real property or Personal Property would be sold in a voluntary transaction between a buyer and seller, neither of whom is under any obligation to buy or sell.

The customary test of fair market value in real estate transactions is the price that a buyer is willing, but is not under any duty, to pay for a particular property to an owner who is willing, but not obligated, to sell.

Various factors can have an effect on the fair market value of real estate, including the uses to which the property has been adapted and the demand for similar property.

Fair market value can also be referred to as fair cash value or fair value.

fair market value

n. the amount for which property would sell on the open market if put up for sale. This is distinguished from "replacement value," which is the cost of duplicating the property. Real estate appraisers will use "comparable" sales of similar property in the area to determine market value, adding or deducting amounts based on differences in quality and size of the property. (See: market value, appraiser)

References in periodicals archive ?
The drop in valuation of level 3 assets indicates that investors are concerned about the reliability of management's estimates of their fair values.
201 1-04, fair Value Measurement (Topic 820); Amendments to intendments to Achieve Common Fair value Measurement and Disclosure Requirements in US.
In this connection, it is necessary to decide whether only one fair value for the element exists or if it is possible that several fair values can exist for the particular item.
The reliance on a sole source exposes management to the risk of unreasonable fair values.
Casabona and Victoria Shoaf discuss the impact of the increasing use of fair value accounting and reporting in financial statements and the difficulties experienced in applying fair value guidance in measuring the fair values of certain assets and liabilities, especially for investments traded in inactive markets for which reliable observable market valuation inputs are not readily available.
New disclosure requirements from the FASB are intended to provide financial-statement users with greater transparency about the way reporting entities apply the fair value measurement provisions of U.
Lately, under the pressure of investors and with help from the organizations involved in regulating accounting activities, we have witnessed a change of the traditional accounting model based on historical cost, which has turned into an accounting model based on the fair value, which would in turn meet the requirements for maximizing share value" (Ionascu, 2003).
157, which maps out the hierarchy that provides direction on how fair values are determined.
Ironically, with this increased information comes increased variability in methodologies and assumptions used to estimate and calculate fair values.
Fair values reflect point estimates and by themselves do not result in transparent financial statements.
Archival research on the value- and risk-relevance of fair values provides only mixed support for these normative predictions.