What is the Fair Market Value calculated from?

The Fair Market Value is typically considered to be an assessment of the value of a property based on what it would sell for in the current market conditions, taking into account similar properties and their recent sale prices. The correct approach to calculating Fair Market Value involves using a ratio or a formula that aligns the assessed value with the factors influencing property value.

Dividing the assessed value by a specific factor, such as .40, is a common method used in some jurisdictions to estimate the Fair Market Value. This factor might represent the assessment ratio which reflects the percentage of the property's market value that is used for tax purposes. In this context, dividing the assessed value by .40 adjusts the assessed value to represent what the market would likely reflect as the value of the property, providing a more accurate depiction of Fair Market Value based on local practices.

Other options do not adequately reflect the established methods for calculating a fair market value. They involve different calculations or principles unrelated to the typical process used to assess Fair Market Value in real estate.