What is "fair market value"?

Fair market value refers to the price that a property would sell for under normal conditions in an open market. This concept assumes that both the buyer and seller are informed of the property’s worth, are willing participants in the transaction, and are not under any undue pressure to buy or sell. It reflects an ideal price based on what a willing buyer would pay a willing seller when neither party is acting out of urgency or duress.

In contrast, the price set by the seller may not necessarily reflect the current market conditions or the property's value; it could be influenced by the seller's personal situation. The average price of properties in the area serves as a guideline but does not accurately appraise a specific property's worth. Lastly, the assessed value determined by tax authorities is primarily for tax purposes and may not align with fair market value, as it often considers factors like property tax assessments rather than actual sales in the open market. Thus, option C accurately captures the essence of fair market value in the context of real estate.