I always understood that Fair Market Value is the agreed upon price between a willing and informed buyer and a willing and informed seller under usual and ordinary circumstances. It is the highest price estimated in terms of money which the property will bring if exposed for sale on the open market with reasonable time allowed to find a purchaser who is buying with full knowledge of all the uses and purposes to which the property is best adapted and for which it can be legally used.
The sellers realtor's job is to do market analysis and price the property accordingly. If the sellers realtor did their job correctly then the asking price should be a correct assessment of value.
Often, the asking price for the home is based upon comparable sales in the area - similar homes that have sold recently. Using the selling prices for those homes, they can determine what the home should sell for, and price the home accordingly.
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