Fair Market Value Vs. Historical Value

The real value of this property is its fair market value.

Both fair market value and historical value are concerned with the value of concrete objects, but the similarities of these types of value stop there. Historical value, also called archival value, relates exclusively to documents.

Identification

Fair market value is the value an asset has when investors are knowledgeable about the asset. A historical value is the value that an asset has that justifies that asset being kept.

Significance

The fair market value is significant because uninformed purchasers might be charged a price different from the fair market value. Historical value focuses instead on retaining a document.

Considerations

Historical value applies exclusively to documents, while fair market value applies to areas of commerce, such as property.

Function

Companies that wish to save space or reduce clutter might look at historical value of documents to determine if the documents should be preserved. Fair market value is used for a variety of purposes such as determining the value of an automobile destroyed in a car accident for insurance purposes.

Desperation

Buyers and sellers who are desperate might be more willing to buy and sell at less or greater the fair market value. Historical value is a more level-headed assessment of documents.

References

• Investopedia: Fair Market Value
• Business Dictionary: Historical Value
• Investor Words: Fair Market Value Definition