How to Assess Fair Market Value

Determining the fair price of goods is the cornerstone of a free market economy.

Fair market value is the price at which property changes hands between an interested buyer and interested seller, neither of whom is participating out of desperation with both parties having knowledge of the relevant facts. Fair market value is vitally important in allowing a free market economy to work in a sustainable manner. Determining the fair market value of an item that you wish to buy or sell is not difficult once you understand the finer points of the process.

Things You'll Need

• Internet access

Instructions

1. Locate and identify the places that are selling the item in question using e-commerce sites such as Ebay and Amazon. Find the item in question and make note of the price that it is selling for in each instance.

2. Find the suggested retail price of the item in question on consumer appraisal sites such as Consumer Reports. Make note of the item's suggested retail price and whether or not it specifies that the suggested retail price fluctuates with the condition of the item.

3. Appraise the item yourself to determine its age and condition by taking note of any flaws in its outward appearance. Rate its functionality on a scale of one to ten, ten being flawless.

4. Contact an expert in the field of the item in question and request an appraisal. Provide your analysis of the item from the previous step to the expert.

5. Collect the figures obtained in steps one, two and four and add them together. Derive an average value by dividing the sum by the total number of values that you obtained.

Tips & Warnings

• See the resources section for a list of Consumer Report sites. These sites can prove invaluable in your search for the fair market value of an item. Generally, the older the item and the better the condition, the more it is worth. Another crucial factor that determines perceived worth is the rarity of the item. A good appraiser should be able to give you information on the rarity of the item in question.

• An appraiser may or may not appraise your item for free. If the item is particularly rare, be prepared to pay a fee for the appraiser's service. Do not discount the value of a professional appraisal because of the potential cost. Such an appraisal will prove crucial in determining the fair market value. Do not look for the price or value of an item in Internet forums. Forums are the realm of opinion, not fact.

References

• High Land Global: Assessing fair market value
• Hud Clips: Understanding fair market value

Resources

• Consumer Report Web: List of sites that give information on products
• Consumer Reports: Website that lists the suggested retail price of items