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Fair Market Value vs. Adequate Time and Exposure to the Market

10/26/2014

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From “Real Estate Trading Services Licensing Course Manual”, fair market value is defined as the price which a willing buyer and a willing seller reasonably expect at any given time.  But in most cases, a seller often sees the value for his/her property quite differently than a buyer does.

How does one derive the fair market value more precisely? According to the manual, we need to take more variations such as adequate time and exposure to the market into consideration.  Unlike money, the most liquid asset, real estate has relatively low liquidity. When selling a property, in order to attract enough potential buyers, taking certain length of time and adequately advertising will be required.

If a house is sold too quickly, we may need to ask whether it’s underpriced.

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