Arm's length transaction

[Terrel L. Shields]

It does not matter whether the appraiser is right or wrong. The appraiser certifies that it is his or her opinion, analyses, etc. ... read the certs required in USPAP.... So what part of the client's demand being something other than your own opinion do we not understand?

 

[CANative]

It does not matter whether the appraiser is right or wrong. The appraiser certifies that it is his or her opinion, analyses, etc. ... read the certs required in USPAP.... So what part of the client's demand being something other than your own opinion do we not understand?

The response on the form will affect their loan program.

 

[Terrel L. Shields]

So what? Not my problem. So are you producing reports that reflect your opinion or someone elses? Isn't that why Austin rails against the GSEs paradigm that uses the Pavlov method of reward and punishment to make the appraiser slobber when the bell rings?

 

[CANative]

So what? Not my problem. So are you producing reports that reflect your opinion or someone elses? Isn't that why Austin rails against the GSEs paradigm that uses the Pavlov method of reward and punishment to make the appraiser slobber when the bell rings?

Thanks for your knee jerk reply.

If the box is incorrectly marked as a non-arms length transaction and it adversely affects their LTV scenario then asking the appraiser to correct it is appropriate. In this case it's likely that the OP was incorrect in marking the transaction as "non arms-length" just because the sale was between the landlord and tenant.

 

[Pittsburgh Pete]

It does not matter whether the appraiser is right or wrong. The appraiser certifies that it is his or her opinion, analyses, etc. ... read the certs required in USPAP.... So what part of the client's demand being something other than your own opinion do we not understand?

Condition of sale is something other than an opinion. In this instance the OP was wrong in labeling it a non-arm's length transaction. Sometimes we make mistakes and can't be too prideful to correct them. Not entirely sure what you beef or point is?

 

[Terrel L. Shields]

Condition of sale is something other than an opinion.....
the box is incorrectly marked as a non-arms length transaction

I believe that the OP could make the case that it is a non-arm's length transaction if we presume that the test for arm's length is the typical MV definition...

And that requires properly being "exposed to the market"...so what basis did they set the price? Were they both equally motivated? Were they both well informed? Was it exposed to the market for a reasonable length of time.... I might swallow the first two, but after while....perhaps not.

Again, this IS the appraisers decision, NOT the UWs'.... it is the appraisers opinion because it cannot be proven a "fact", we can only conjecture what is or isn't an "arm's length transaction"...like the definition of ****.. "we know it when we see it, but we still can't provide a clear dividing line between "art" and "****"...

 

[CANative]

And that requires properly being "exposed to the market"...

NO IT DOESN'T. Different issue. Why would an appraiser try to "make a case" about this?

 

[Terrel L. Shields]

I see a ton of farms that sell to the renter and typically they sell below market...I know what I see. I've never seen a renter pay MORE than market so imho, the bias is towards the low side. Most sellers really have no idea what it would bring if exposed to the market.

 

[J Grant]

Marketing time, can, to an extent, be part of what determines arms length vs non arms length...(it is present in a number of definitions, though missing from a few definitions).

A landlord tenant sale is a grey area that can be AL or not...often, the seller/landlord is aware of what similar properties sell for in the open market, but by selling to tenant, they compensate by not having to pay a realtor comission, and not having it sit empty on the market 6 months while they try to sell. So it is an informed decision, and they are acting in their own best interest. The tenants, depending on who they are, may be more or less aware of similar places sold, but usually they are aware...they read the paper, go online, perhaps even look at a few properties before making an offer. Sometimes, I have seen tenants pay a bit more, because they don't have moving costs.

To determine how Arms length the sale is, look at the price, and perhaps make an adjustment for marketing time, and/or weight the comp less due to sale circumstances.

 

[Pittsburgh Pete]

Marketing time, can, to an extent, be part of what determines arms length vs non arms length...(it is present in a number of definitions, though missing from a few definitions).

A landlord tenant sale is a grey area that can be AL or not...often, the seller/landlord is aware of what similar properties sell for in the open market, but by selling to tenant, they compensate by not having to pay a realtor comission, and not having it sit empty on the market 6 months while they try to sell. So it is an informed decision, and they are acting in their own best interest. The tenants, depending on who they are, may be more or less aware of similar places sold, but usually they are aware...they read the paper, go online, perhaps even look at a few properties before making an offer. Sometimes, I have seen tenants pay a bit more, because they don't have moving costs.

To determine how Arms length the sale is, look at the price, and perhaps make an adjustment for marketing time, and/or weight the comp less due to sale circumstances.

Go get a dictionary of real estate appraising and read the definition of arm's length. A transaction can be arm's length and sell below market value or above market value. And we wonder why...........!