Arms Length Transaction

[Dublin ohio]

Wouldn't a non arms length sale price be more compromised in one way or another compared to a traditional arms length sale?

Maybe or maybe not. Just because it is a non arms length sale. Does not necessarily mean it is not being sold at a market price.

 

[Tom D]

as usual, did we decide either way. the answer, never actually is agreed upon on this thread. typical & common for appraiser's opinions.

 

[alebrewer]

I think the consensus was/is that a transaction between tenant and owner is a non-arm's length transaction. I think there is also consensus that non-arm's length doesn't necessarily imply that the transaction is below market value.

 

[ZZGAMAZZ]

You are smart. So by your definition of a relative if there is no blood involved they are not relatives. Stepmothers, adopted kids, etc. no blood involved is no relative.

A non-arm's length transaction is a deal with someone you have a relationship with, whether that's professional or personal. This can include family members, friends, business partners, etc. This type of relationship between buyers and sellers is known as an identity of interest.

Can one apply "market value" to a non-arms-length purchase, if the definition of "arms-length" is affected, accordingly?

 

[TerryRohrer]

Can one apply "market value" to a non-arms-length purchase, if the definition of "arms-length" is affected, accordingly?

I'm not sure what "apply market value" means, but if a non-arms-length transaction were to be considered as a comparable sale in an appraisal, it would be prudent for the appraiser to consider whether or not that prior relationship had an impact on that price (assuming you meant "if market value is affected"). Better yet, use a different sale that is not similarly affected.

 

[ZZGAMAZZ]

I'm not sure what "apply market value" means, but if a non-arms-length transaction were to be considered as a comparable sale in an appraisal, it would be prudent for the appraiser to consider whether or not that prior relationship had an impact on that price (assuming you meant "if market value is affected"). Better yet, use a different sale that is not similarly affected.

I am referring to the subject as a possible non-arms-length because it is a sale from the owner to the existing tenants.