What kind of transaction typically indicates that a property is sold for its fair market value?

When evaluating a transaction that typically indicates a property is sold for its fair market value, an arms-length transaction is the most relevant choice. This type of transaction occurs between two parties acting in their own self-interest and seeking to maximize their own benefits. Both the buyer and seller have equal bargaining power, and neither party is under any undue pressure to finalize the deal, which ensures that the price reflects the true market value of the property.

In an arms-length transaction, the negotiation process is conducted without any special relationships between the parties involved, which helps to eliminate any potential conflicts of interest. As a result, this type of sale is considered the most reliable indicator of a property's fair market value, as it reflects what a willing buyer would pay a willing seller in an open market.

Other types of transactions, such as related transactions, often involve parties who may have a personal relationship that could affect pricing and terms. Foreclosure transactions can result in properties being sold below market value due to the urgency of the sale. Quick sales may also indicate a reduction in price due to time constraints. These situations do not necessarily provide an accurate assessment of fair market value compared to an arms-length transaction.