Fair market value (FMV) is the price a property would sell for on the open market, assuming both buyer and seller are acting freely, have reasonable knowledge of the property, and neither is under pressure to complete the transaction.
This theoretical "perfect sale" scenario is the standard used by appraisal districts when assessing your property for tax purposes. Your assessed value should reflect fair market value—if it exceeds what your home would actually sell for, you may be overassessed.
Fair market value is determined by analyzing recent sales of comparable properties, considering current market conditions, and making adjustments for differences between properties.
Fair market value is THE standard for property tax assessment. If your assessed value exceeds fair market value, you're paying taxes on value that doesn't exist.
How to prove FMV in a protest:
• Find recent sales of similar properties
• Adjust for differences (size, condition, features)
• Calculate what YOUR home would sell for
• Compare to your assessed value
Strong evidence includes:
• Arm's length sales within 6-12 months
• Properties in your neighborhood
• Similar size, age, and condition
• A recent appraisal (if available)
If comps show FMV below your assessment, you have a case.
What fair market value assumes:
The hypothetical sale scenario:
• Buyer and seller are both willing (not forced)
• Both have reasonable knowledge of the property
• Property is exposed to the market for a reasonable time
• Payment is in cash or equivalent
• No unusual circumstances affecting price
What it's NOT:
• A foreclosure sale price (seller under duress)
• A sale between family members (not arm's length)
• A quick sale below market (not enough exposure)
• A sale with seller financing at below-market rates
• An investor flip price (buyer has special motivation)
They should be equal, but often aren't. Assessed value is what the county says your property is worth. Fair market value is what it would actually sell for. When assessed value exceeds fair market value, you're overassessed and can protest.
Primarily through the sales comparison approach—analyzing recent sales of similar properties. Appraisers also consider the cost approach (replacement cost minus depreciation) and income approach (for rental properties) to triangulate value.
Zillow estimates aren't considered reliable evidence in protests. Use actual sold prices (not estimates), ideally from MLS data, county records, or a licensed appraisal. Estimates are opinions; sales are facts.