FMV is the estimated amount, expressed in terms of money that may be reasonably expected for a property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, as of a specific date. FMV is dependent upon the cost of new assets, the market prices of similar assets being bought and sold in the used market, and the impact of age, wear, technology, and market conditions as they may be quantified in physical, functional, and economic obsolescence.
In fair market value the market forces play a predominant role. In a market there are alternative options available to both buyers and sellers. In such a situation, if there are no overriding reasons to force any decision for a buyer to buy (from a particular seller) or for a seller to sell (to a specific buyer at a given price) where buyers and sellers are not influenced by any uncommon market conditions such as hyper-inflation or undue, uncommon depression, then the value at which an exchange takes place is termed to be a Fair Market Value (Mulyankan Consultants Ltd, n.d.).
