Why is understanding fair market value important for buyers?

Understanding fair market value is crucial for buyers because it aids in determining a fair purchase price for a property. Fair market value reflects what a knowledgeable and willing buyer would pay, and what a knowledgeable and willing seller would accept, under normal market conditions. By comprehending this value, buyers can make informed decisions, ensuring that they do not overpay or undervalue a property in negotiations.

This understanding enables buyers to assess whether the asking price is reflective of the property's true worth based on comparable sales, market trends, and property condition. A proper evaluation of fair market value can also equip buyers with leverage during price negotiations, helping them advocate for a purchase price that aligns with their financial goals and the true value of the property.