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What Is Fair Market Value (FMV) in Real Estate?


You know your home is a valuable asset, but what is it actually worth? One of the most important figures to understand as you get ready to sell your home is Fair Market Value (FMV); it is key to a successful home sale. We’ll break down what Fair Market Value is and why it plays such a crucial role in the home selling process.

What Is Fair Market Value?

Fair Market Value (FMV) is the estimated price a property would sell for between a willing buyer and a willing seller, given that each party knows all the relevant information associated with the property. In other words, it’s the price your home is likely to sell for under the current conditions of your local real estate market.

The Important of Fair Market Value

Yes, you can research home prices on your own and get an idea of what your home is worth. However, accurately pricing your home requires a more in-depth approach. Your agent’s Comparative Market Analysis (CMA) will take into account the various factors that influence home prices using comprehensive data available to real estate agents on the Multiple Listing Service (MLS)

So, what’s the point of this detailed analysis? Pricing your home accurately is paramount. If it’s overpriced, you may deter potential buyers and it will lose value over time as it continues to sit on the market. If it’s priced too low, you might leave money on the table. FMV helps you strike the right balance.

You can also use Automated Valuation Models (AVMs) to see what your home could be worth. (That was the last acronym in this post, we promise!) These calculators give you a general idea of your home’s value, but AVMs are not 100% accurate. They’re a great starting point, but again, your agent’s resources will ultimately determine the right price for your home.

To get an estimate of how much your home is worth, try our Home Worth Calculator here:



Fair Market Value sets the stage for smooth negotiations later in the home selling process. With a solid price in place, you’ll get reasonable offers from buyers. You and your agent will discuss whether to accept or counter the buyer’s offer and how to handle their contingencies. Finally, FMV makes the home appraisal process easier. With an accurate valuation in place, you can proceed knowing that the chances of a mismatching appraisal are low.

A close up shot of hands across a table from one another in an office. On the left, the hands of the real estate agent calculate fair market value on a calculator. On the right, the hands of the client are writing notes with a pen.

Image Source: Getty Images – Image Credit: Perawit Boonchu


How Is FMV Calculated?

Several factors influence the Fair Market Value of a property. Comparable sales or “comps” play a significant role in determining FMV. Real estate professionals analyze recently sold homes in your area that are similar to yours, providing a benchmark for pricing your property. The property’s condition, its size, and location all factor into the math as well. Appraisers may also use a cost-based approach to determine FMV if they can’t find sufficient comparable homes in your area.

You can get a ballpark estimate of your home’s value by looking at tools online but determining a precise value will require the expertise of your real estate agent. To see what your home is worth, or for answers to all your home selling questions, connect with an experienced local Windermere agent today:



­­­­­­Featured Image Source: Getty Images – Image Credit: AzmanL


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