A fair market value is often an estimate of what a willing buyer would pay to a willing seller, both in a free market, for an asset or any piece of property. If such a transaction actually occurs, then the actual transaction price is usually the fair market value. Note that the opinion of people that are not interested in buying or selling an asset has little meaning, because they are not active in the market. Thus, "market value" (which is the same for everyone in the market) is not identical to the "intrinsic value" that different individuals may place on the same asset based on their own preferences and circumstances. Answer furnised by Wikpedia.

When marketing a home, Fair Market Value is established when a home exposed to a sufficient number of qualifed buyers to determine what a buyer is willing to pay and a seller is willing to accept.

Theoretically the amount of your buy-out (based on 2 or more appraisals) should be fair market value (the amount a Buyer is williing to pay - usually determined through comps), but that isn't always the case. For example, in the Gilcrease Expressway project more homes are currently being purchased. The Oklahoma Department of Transporation is purchasing the homes based on appraisals. However, the ODOT is working with the City of Tulsa to make sure these homeowners are able to purchase another home by assessing current home inventories to find out what "replacement" costs are going to be for the homeowners. ODOT and the City will be offering monies to make up the difference between the buy-outs and the new purchases. I actually work with one of the ODOT employees to provide her with information about homes that are currently listed for sale so that she valuable information to use in determing these figures.

Jane,

What someone is willing to pay and what you are willing to sell for. Value- is more for the same and same for less. If only 80% of the market understood this we would ahev abooming market again instead of stressed out people trying to sell overpriced homes which become foreclosure that compound the problem.

Jane
Thank you for your question. The phrase "Fair Market Value" (FMV) is based on the price a willing and knowledgeable buyer, capable of closing escrow, is willing to pay for a property.

Depending upon the state of the local real estate market (going up, going down, or flat), there may be differing interpretation of FMV.

For example, in a flat market, if an appraiser takes a sampling of comparable properties that have sold during the last six months, that would probably be an accurate estimate of the property's value.

If the market is declining, then if the appraisser uses only the values of sold properties, the value might truly be inflated. By estimating the degree of market change (number of total listings, percent selling, their sales price versus their list price), an appraiser can more accurately estimate what a buyer might pay.

If the market is going up, then using sold properties might under-value the property's true market value. In that case, greater weight might be given to properties in esrow (pending), and what the current list price versus sale price ratios are.

The other key component s if the environment around the property changed. For example, if the reason that they want your land is giong to increase the value you might have a fight on your hands. Some towns are in trouble because they purchase land by eminent domain, then sell it to developers for a hefy profit, plus have tax revenue from the business that buys the property.

Hope this is helpful.

When a government body is purchasing your property for a right of way, the fair market value should be the appraised value of the property from a certified appraiser. If you do not agree with the appraisal, you should have the right to hire your own appraiser to dispute the findings. Request a copy of the complete appraisal from the entity buying your property.

I have been through a similar buy out and the appraiser they used was very reputable and the value they gave me was justified. That may or may not be the same in your case.

Well, it should be based on comparable properties. Properties that are similar to the one being bought out, close by. Ideally, for instance, same model, in the next block over. The problem is that when a property is taken over by a city or county, they'll exercise the "right of eminent domain." They're still supposed to offer fair market value, but often they'll seem to come up with a figure substantially below that. There are usually written policies and procedures for a homeowner to appeal a figure that he/she feels isn't fair. To fight it, the best advice is to find a good lawyer with expertise in that area (zoning, land use, etc.)

Good luck.