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Simple English definitions for legal terms
actual market value
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A quick definition of actual market value:
Actual market value refers to the amount of money that something is worth in a fair and open market. It is the price that a buyer is willing to pay and a seller is willing to accept for something in an arm's-length transaction. This value can be influenced by factors such as supply and demand, the condition of the item, and the opinions of buyers and sellers. It is important to determine the actual market value of something for purposes such as insurance, taxation, and buying and selling goods and services.A more thorough explanation:
Actual market value refers to the amount of money that something can command in an exchange. It is the price that a buyer is willing to pay and a seller is willing to accept in an arm's-length transaction. Actual market value is also known as fair market value.
For example, if a person wants to sell their car, the actual market value is the price that a buyer is willing to pay for it. If the seller and buyer agree on a price, then that is the actual market value of the car.
In insurance, actual market value is used to determine the replacement cost of an item minus normal depreciation. For example, if a person's car is stolen and they have insurance, the insurance company will determine the actual market value of the car at the time it was stolen and pay the policyholder that amount.