Arms' length?

[Alison Swain]

Buyer formerly worked for seller (trustee's father who is now deceased) as a handyman for several small rental properties. Now the buyer is purchasing the house across the street from where he lives. The seller has agreed to knock $30K off the listing price in lieu of not having to put out any more money or effort in making the place presentable for a normal sale (it is listed in MLS).

How do I report this? Is it an arms' length transaction or not?

 

[CURT VAN HOOSER]

Why not? What is/would be the value of a similar property without repairs in your market?

 

[Wendy]

Based on your description, it looks like the property was offered on the open market. As long as the seller is not cutting deal based on the warm fuzzies of a prior relationship, I do not see a major issue.

I'd give a brief explanation and limit the consideration given to the sale.

 

[mikeyaklin]

Arm's Length - REO's

I keep getting conditioned that REO's sales are not arms-length, maybe I am just not wording it correctly how are others handling these. Please advise.

 

[Alison Swain]

I appraised it as an estate deal (not probate --- daughter is/was trustee) for $145,000 as-is a couple months ago. So yeah, I think she's knocked off a huge chunk. But she's got 10 other houses to move and didn't want it to linger when she had a willing buyer on the hook.

 

[Wendy]

......and didn't want it to linger when she had a willing buyer on the hook.

I see that motivation all the time now. In the stair-step decline we've seen, taking a big whack to sell now will usually result in the same sales price as waiting in a falling market.

 

[Kevin A. Spellman]

The seller is forfeiting equity to facilitate the sale if the market value is higher than the sales price. If not, a market price and an arms-length transaction.

 

[RustNeverSleeps]

I keep getting conditioned that REO's sales are not arms-length, maybe I am just not wording it correctly how are others handling these. Please advise.

A liquidation sale is not arms length.

 

[CURT VAN HOOSER]

I keep getting conditioned that REO's sales are not arms-length, maybe I am just not wording it correctly how are others handling these. Please advise.

The bank(or whoever) owns it and wants to sell it to recoup some money. The buyer needs a home, wants to buy it, and is aware that there may be some problems with it. He found it in MLS (normal market exposure). What's not arms-length about that?

 

[Michigan CG]

A liquidation sale is not arms length.

But could it be the current market?

Are short sales arms length?

How about foreclosure properties?

Auctions?

Or do we define willing sellers and willing buyers differently in the current market? Banks owning foreclosure properties in some markets are making a new market. Hence the principal of substitution.


And how do we know this is a liquidation sale?


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