The phrase "fair market value" refers to the price that a specific property or asset would achieve in the marketplace, according to Investopedia. Ideally, the fair market value should exhibit what a buyer and seller mutually deem a fair and accurate valuation of an asset's worth.
In order to determine a property or asset's fair market value, two criteria must first be met, explains Investopedia. Potential buyers and sellers must possess valid knowledge about the asset and be able to negotiate free of any unfair pressure to trade. There must also be an acceptable amount of time for the transaction to take place and conclude.