FMV?
Can someone please tell me what Fair Market Value means and how it is calculated? I notice on my county assessor's website that there is a field entitled "Estimated Fair Market Value" and it looks like it is calculated by taking the assessed value and dividing it by the "Average Assessment Ratio." I have no idea what the average assessment ratio means so this only confuses me further.
Can anyone explain this to me? The reason that I ask is that I am baffled as to how people are finding all of these properties that they can get for 80% or less of FMV. Perhaps my understanding of FMV is wrong? Most properties around this area sell for significantly more than their FMV.
Any help you can offer is appreciated!!
Fair Market Value (FMV) is the actual value of the property based on the market conditions in the area. For example: If houses in the same subdivision/area are selling for $150,000 (with the same bed/baths/sq.ft), then most likely the property you are looking to buy is worth $150,000.
As for the "estimated" FMV from the property appraiser's, that value is used for taxing purposes and is usually lower than the actual FMV. The county uses the property appraiser's estimated value in order to determine the amount of property taxes to charge the owner annually.
When a person purchases a house worth $100,000 for 80% below FMV, then they bought it for $80,000. So, in essence, the buyer bought the property with $20,000 in equity.
Tanya