Which attribute is associated with fair market value?

Fair market value is defined as the price at which property would change hands between a willing buyer and a willing seller, both of whom are knowledgeable about the relevant facts and neither of whom is under any compulsion to act. This condition reflects the essence of a fair exchange where both parties are motivated to engage in the transaction without pressure or urgency, ensuring that the price agreed upon is a true reflection of the property's value in the market.

This description is crucial in various valuation contexts, especially in contexts like tax assessments, business sales, and litigation. It ensures that the valuation is grounded in a realistic scenario that reflects genuine market conditions rather than coerced circumstances or emotional decision-making.

The other choices do not accurately capture this fundamental aspect of fair market value. For example, stating that fair market value is "not applicable to federal tax valuation" overlooks the importance of fair market value in tax contexts, where it plays a critical role. Likewise, the idea that it "always results in a higher value than fair value" misrepresents the relationship between the two concepts, as fair value can vary based on different criteria and contexts. Lastly, focusing strictly on market trends ignores the significance of the voluntary nature of the transaction that characterizes fair market value, which cannot be