THE PURPOSE OF THE APPRAISAL



Fair Market Value

Fair market value is usually used for estate-evaluation purposes, and is an assessment based on what a willing buyer and seller would agree to without a forced sale.  Appraisal criteria for estates have been legislated to include specific information and data, but do not include the factors tha an insurance replacement appraisal does, and so this is usually a lower value.  The following is the U.S. Department of Treasury definition of fair market value:
 
The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulaion to buy or sell and both having reasonable knowledgeof relevant facts.  The fair market value of a particular item of property includible in the decedent's gross estates is not to be determined by a forced sale price.  Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item in a market other than that in which such it in a most commonly sold to the public, taking into account the location of the item wherever appropriate.  Thus, in the case of an item of property includible in the decedent's gross estate, which is generally obtained by the public in the retail market, the fair market value of such an item of property is the price at which the item or a comparable item would be sold at retail. Treasury Regulation 20.2031-1 (b).