How do Two Friends Determine Fair Market Value

[John Laney]

Hello, I may be moving forward with purchasing a property from a friend. What are the options we have for determining fair market value? 

Using comps gets us close, but of course my comps would tend to be low while his would tend to be high....

The tax assessment is no help here since it is far to low...

Would you recommend hiring a 3rd party appraiser to do an appraisal and then just selling it for that price?

Thanks for the help, John

[Michael S.]

Would absolutely recommend an independent appraiser so that both of you feel comfortable with the deal, and the friendship does not get adversely affected.  I'd recommend you split the cost - if one of you feels strongly that the appraisal is too high/low, then that individual should have the option to get a second appraisal at their cost.