According to investorwords.com, fair market value is determined by the price a seller and buyer agree on, assuming that neither of them is desperate for the sale or pressured to make a decision. That price can be, and often is, significantly higher or lower than the intrinsic value of the item. Determining the fair market value for an individual item, such as a cast iron bathtub, is possible with adequate research and consideration.

Factoring Fair Market Value

The article "Determining the Value of Donated Property," published by the Department of the Treasury, states that there are four main considerations when determining fair market value. The original cost of the item, comparable sales, the cost to replace the item and the opinions of experts should all be taken taken into consideration when trying to determine fair market value. However, when dealing with antiques or vintage items, many other conditions factor into the equation. If your cast iron bathtub once belonged to Abraham Lincoln, or if it is one of many that were mass produced in 1960, these facts will greatly alter its value. The best place to start when searching for the value of an item is to check online auctions or retail outlets in your area. Learning what other people are selling a similar item for will help you understand what your item can be sold for and what is would cost you to replace it. Consulting an appraiser is also helpful, especially if your cast iron bathtub does have special considerations such as rarity, provenance or unusually excellent condition. Also, having a written appraisal will support your claims of monetary value if you decide to sell it. In fact, the Internal Revenue Service requires accredited appraisals when auditing the claimed value of items for which you are claiming a deduction great than a certain amount.

Negotiating a Fair Sale

Remember that determining a selling price is only half of determining a fair market value. If no buyers want to purchase your cast iron tub at any price, then it has no market value no matter how "valuable" it is. Conversely, if there is something special about your item that encourages buyers to offer unusually high prices, those special attributes are driving the market value. If you are highly motivated to sell an object, it may be necessary to negotiate a fair price. Remember that most antiques are valued in ranges. For example, perhaps your research on original cost, comparable sales, replacement value and expert opinion has determined that the fair market value of your cast iron tub is worth between $100 and $200. Educating yourself on the value of your cast iron tub will allow you to accept or decline an offer outside of that range with confidence.

Source:

Investor Words: Fair Market Value

Department of the Treasury: Determining the Value of Donated Property

More Information:

Hudson Valley Antiques: What is it Worth?