Seller agent is the Borrower

[J Grant]

I am appraising market value always. The question is whether there is specific evidence that this is or is not an arm's length transaction. It is certainly an atypical transaction. But that does not mean that it is a non-arm's length transaction.

Without further info, IMO it is an arms-length transaction if the buyer and seller do not personally know each other or they do not have a relationship outside of the transaction. The terms might be complex and are affecting the price, but the relationships between parties is AL.

 

[Fernando]

If agent got a steal, I wouldn't be surprise when he will sell it within 2 years and make nice profit.

 

[Vermonter]

I'm confused by the OP reference to listing agent and "seller" agent? Aren't they the same?

Doing a home that is not listed in the MLS database.. According to a phone conversation with the listing agent, the seller did not want to go through process of showing and marketing. Fine. Then I look at the contract and realize that the seller agent is the borrower.

If not listed and marketed how is there a listing agent?

 

[Artemis Fowl]

I am appraising market value always. The question is whether there is specific evidence that this is or is not an arm's length transaction. It is certainly an atypical transaction. But that does not mean that it is a non-arm's length transaction.

Why does that even matter?
I would say that evidence exists to provide reasonable doubt. I don't know if I would even discuss it unless specifically asked.

 

[Fernando]

I'm confused by the OP reference to listing agent and "seller" agent? Aren't they the same?



If not listed and marketed how is there a listing agent?

In CA usually listing agent is called seller agent. Before, selling agent meant buyer agent which was confusing. Now it's clearer - Buyer Agent as it should.

 

[paperasir]

It matters because we have to report whether or not it is an arm's length transaction.

I think there is some confusion on this thread as to what is and what is not an arm's length transaction is. It can be an non-arm's length transaction without the two parties being related or familiar with each other.

A listing agent is the person that lists the property in the MLS database. Are there listing agents listing properties without the consent of the Seller? Yes, the listing agent is the Seller agent.

 

[J Grant]

It matters because we have to report whether or not it is an arm's length transaction.

I think there is some confusion on this thread as to what is and what is not an arm's length transaction is. It can be an non-arm's length transaction without the two parties being related or familiar with each other.

A listing agent is the person that lists the property in the MLS database. Are there listing agents listing properties without the consent of the Seller? Yes, the listing agent is the Seller agent.

Make your best call, is it AL or not, and explain why. That is all you can do. Sometimes it is a grey area. If the client pushes back, you can always reconsider it.

 

[Artemis Fowl]

So present your evidence and opinion that it is not arm's length.

 

[Tom4value]

Doing a home that is not listed in the MLS database.. According to a phone conversation with the listing agent, the seller did not want to go through process of showing and marketing. Fine. Then I look at the contract and realize that the seller agent is the borrower. The contract price is significantly below market value. I sent an email to the agent/borrower asking if the Seller was atypically motivated and asked him how he got to his valuation on the property. No response. Report the facts that the borrower is the seller agent and that the contact price is below market value, right? I cannot assume a less than arm's length transaction. Nor am I going to speculate in the report about the Borrowers motives, right?

I actually did a similar one of these last month, I think. Property was not listed in the MLS. At the inspection, I asked the listing broker if she was the buyer. She said, “close, it is my son. I was going to list it and he (son) said, ‘hey, can I see it?’.

In this case, it went for a little less than what I appraised it for but not 20-25%. Still, my point is it was arms length. Why? The seller wanted to get as much as they could. The buyer wanted to pay as little as he could. Seller paid a bit by finding a buyer immediately.

Of course, in your comments, explain everything what you said here.

 

[DTB]

In an arm-length transaction, both parties are looking out for their own best interests. How does an agent accomplish that while meeting their fiduciary duty to their client?

Easily. I sold a multi family to the agent that listed it. We never put it into MLS, he got the commission he wanted to use toward the down payment and I got the net price that I wanted.

We are both very happy.

BTW you KNOW I didn't sell it under value.