Arm's Length Sale?

[Dublin ohio]

They both want to get the highest price possible

Not in the case of a buyout

 

[djd09]

That was my thinking. If I offer $260 they have to decline.

What to remember in non–arm’s-length transaction​

First and foremost, both the seller and the buyer will be expected to be upfront and honest about the nature of their relationship. Usually, an affidavit is drawn up to document these details in writing.

“The affidavit states that no party shares a business interest with the mortgagee,” says Terrylynn Fisher, an agent in Walnut Creek, CA. “Furthermore, it says that there are no hidden terms or special arrangements between the buyer and seller, or their agents. Special arrangements could include money, kickbacks, gifts, and/or understandings to move back in or stay in the property.”

What is an Arm's Length Transaction? Real Estate That's Fair and Square

Arm's length transactions may sound like something that has to do with buying shirts, but they're a big part of the real estate business. So what are they?

www.realtor.com

special arrangements...

 

[Philly19130]

Not in the case of a buyout

A buyout between spouses would not be arm’s length

 

[NC Appraising]

I regards to the divorce scenario wouldn’t both parties(divorcing couple) be acting in their own best interest regarding the sale price. They both want to get the highest price possible which is to me why it is an arm’s length sale. They may not want to sell but when it comes to the sale they are acting with their best interest in mind.

Usually one party makes it very difficult as they do not want to sell. They will make it hard to schedule an appointment, note every repai issue, etc. Normally divorce properties sell below market value for the above reasons. Or both parties were just ready to move on for a quick sale or financial reasons. Or one party won't sell because they think it's worth xxxx, and rejects all offers. Becomes stale and sells below mv.

My point was are the buyers and sellers related or are business partners, etc. This is the main determining factor.


Back to topic....
From fannie
Non-arm's length transactions are purchase transactions in which there is a relationship or business affiliation between the seller and the buyer of the property.

Does your transaction meet the above?

 

[Philly19130]

Usually one party makes it very difficult as they do not want to sell. They will make it hard to schedule an appointment, note every repai issue, etc. Normally divorce properties sell below market value for the above reasons. Or both parties were just ready to move on for a quick sale or financial reasons. Or one party won't sell because they think it's worth xxxx, and rejects all offers. Becomes stale and sells below mv.

My point was are the buyers and sellers related or are business partners, etc. This is the main determining factor.


Back to topic....
From fannie
Non-arm's length transactions are purchase transactions in which there is a relationship or business affiliation between the seller and the buyer of the property.

Does your transaction meet the above?

No it does not meet this criteria. I am not aware of any relationship. My confusion on this stems from a concise definition of what would qualify as arm’s length accepted across board rather than what does not. For example HUDs definition of arms length “
Arm’s Length Transaction
An Arm’s Length Transaction refers to a transaction between unrelated parties who are each acting in their own best interest.” So I suppose arms length is now relative to whether or not it’s a HUD loan or conventional?

 

[Philly19130]

No it does not meet this criteria. I am not aware of any relationship. My confusion on this stems from a concise definition of what would qualify as arm’s length accepted across board rather than what does not. For example HUDs definition of arms length “
Arm’s Length Transaction
An Arm’s Length Transaction refers to a transaction between unrelated parties who are each acting in their own best interest.” So I suppose arms length is now relative to whether or not it’s a HUD loan or conventional?

Essentially Fannie does not care if the parties are acting in their own best interest so long as they are not related but HUD requires they are acting in their own best interest and are not related. So in my situation based upon the fannie definition of non arms length I guess it has to be written as arm’s length on this conventional loan. However if this were a HUD I would maintain non arms length. NC I thank you for your response and the professional dialogue.

 

[NC Appraising]

Fwiw, I know where you are coming from. Unfortunately, the UAD does not have a "other" that can be checked. Not a hill worth dying on. Just change it and move on.



In my opinion which is not worth anything, your transaction is more similar to a non arms length . In other words, it is not a typical market exposed sale/transaction.....it's a atypical transaction.

But I'm not in charge....

Maybe a new or a different term can be/should be used/added to the UAD.

The appraiser must also indicate the type of sale for this transaction from the list of available choices. The appraiser must start at the top of the list and select the first sale type that applies. Only one selection is permitted. The valid sale types are as follows:
SALE TYPE
REO sale
Short sale
Court ordered sale
Estate sale
Relocation sale
Non-arms length sale
Arms length sale

 

[Dublin ohio]

An Arm’s Length Transaction refers to a transaction between unrelated parties who are each acting in their own best interest.

So who determines if they are acting in their own "best interest"?

 

[Dublin ohio]

Maybe a new or a different term can be/should be used/added to the UAD.

Good idea. Since it appears that these type of sales are becoming somewhat more common. Maybe they should add "restricted sale" to the mix

 

[Dublin ohio]

A buyout between spouses would not be arm’s length

Didn't say it was