Define Fair Market Value.

Fair Market Value is defined as the price that a knowledgeable buyer would pay and a willing seller would accept for a property in an open and genuine sale transaction. This definition emphasizes the importance of both participants in the transaction being informed and acting without undue pressure. It implies that the sale should be conducted in a competitive market environment where the buyer and seller have reasonable understanding of the property, its value, and market conditions.

The essence of Fair Market Value lies in the voluntary nature of the transaction: both parties should have the freedom to negotiate and choose whether to proceed with the sale. This ensures that the price reflected is a true indication of the property's market value at that particular time.

Other choices do not capture the full nuances of Fair Market Value. For instance, an amount agreed upon without negotiation does not consider the true dynamics of market engagement and the informed decision-making process. Meanwhile, defining Fair Market Value as the minimum price a seller would accept or the average price of similar properties overlooks the essential characteristics of negotiation and the condition of the transaction being genuine and voluntary.