What is typically the selling price based on when determining fair market value?

The correct answer focuses on the definition of fair market value, which is fundamentally tied to what a property would sell for on the open market under normal conditions. This concept emphasizes the importance of market dynamics, including supply and demand, as well as other factors that influence pricing in real estate transactions.

Fair market value is determined by considering what a willing buyer would pay a willing seller when neither party is under any undue pressure to buy or sell and both have reasonable knowledge of the relevant facts. This understanding enables appraisers, buyers, and sellers to gauge property values accurately based on real market conditions, rather than arbitrary figures or historical prices.

Other options fail to represent the true nature of fair market value. For instance, referencing the highest price ever paid for similar properties does not account for current market conditions or the specific attributes of the property in question. Similarly, calculating the average price of all properties in an area may not reflect the individual nuances of a specific property, and using the book value overlooks the current market trends and the actual worth determined by buyer and seller interactions. Therefore, option C is the most accurate representation of how fair market value is established.