Arms' length?

[RustNeverSleeps]

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?

Liquidation sales typically have shorter than normal marketing times and are priced accordingly (below fair market value) so I would think the bank (seller) is not typically motivated. If you leave "fair market value" and "typically motivated" out of the definition of "arms length" though, it's most likely they don't know each other and that would be arms length.

 

[RustNeverSleeps]

But could it be the current market?

It could be yes.

Are short sales arms length?

It depends.

How about foreclosure properties?

Maybe.

Auctions?

Hmmm

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.

Excellent point.

And how do we know this is a liquidation sale?

Perhaps I am using this word loosely?


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You do not know what you do not know.

 

[Michigan CG]

Perhaps I am using this word loosely?

Perhaps you are.

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You do not know what you do not know.

 

[Webbed Feet]

Liquidation sales typically have shorter than normal marketing times and are priced accordingly (below fair market value)<...... snip...... >

Mr. Austin,

Caveman says: "Below what?" and "Leave what?"

Webbed.

 

[Webbed Feet]

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.

Ms. Swain,

I am going to let everyone else debate what "arms-length" means. As they do that, I'll tell you that my opinion in your case is you can't be a mind reader. Nor can you be sure all of the truth, and nothing but the truth, will be disclosed to you. Because of that, I would not "give" the sales contract any "consideration" at all as any part of development. The only "consideration" I would give it is as a means of explanation in the reconciliation. Which in fact would really be "analysis" and not "consideration."

I suggest your most appropriate analysis might very well conclude that it cannot be determined if this is an arms-length sale or not. If your final opinion is more than the contract amount, there is a strong suggestion that prior relationship, and possible seller pressure due to an estate need for cash may all be taking place.

Webbed.

 

[Mike Boyd]

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.

I have had these questions asked of me, also. I came to the conclusion that they simply want to distinguish a market REO sale from a foreclosure sale.