Describe the term "fair market value."

Fair market value refers to the price that a property would sell for in an open and competitive market, assuming that both the buyer and seller are knowledgeable, willing, and under no pressure to buy or sell. This definition is based on the idea that the transaction takes place under typical market conditions where both parties have reasonable access to relevant information.

When valuing a property, the fair market value reflects a consensus agreement between buyer and seller on a price that they both find acceptable. It considers factors such as current market trends, property condition, and comparable sales in the area. Because the transaction occurs without undue pressure or coercion, fair market value serves as a reliable indicator of a property's worth to both parties engaged in the sale.

The other options presented do not accurately capture the essence of fair market value. The lowest price a seller is willing to accept is a more subjective figure and may not reflect actual market conditions. The average price of similar properties does not account for specific features of a property or its unique circumstances. Lastly, the highest price a buyer is willing to pay can be influenced by emotional factors or competition and may not align with actual market value. Thus, the definition involving mutual agreement in an open market stands as the most accurate representation of fair market value