If the non-arms length sale was forbidden from being used as a comparable sale then why does the UAD have NAL as an option on the Sales comparison grid. I agree that most times a NAL sale does not meet the definition of market value and should probably be excluded from the comparison, but there may be times when the property actually sold between related parties at market value and is, therefore, a valid comparable. If it wasn’t then why is it part of the UAD formating?

Too many reasons to sell not enough buy, Except for the potential of profit, or reduction of losses. Seems a contradiction! Partnerships illustrate contradictions, some have reasons for a quick profit, some have reasons to preserve capital.

Once upon a time when sales were really slow I found the re-negotiating of seller sale most enlightening. The previous seller renegotiated rather than repoed. The pressure of a sale was equal on each of the parties; The purchase money trust deed holder v the over extended recent buyer. Theses negotiations exist, finding them is tough, but informative.

Painting a picture of the situation is MOST important, for the analysis.

1. There is no prohibition in FNMA Freddie Mac, VA or FHA in a seller selling to a related family member; business partner or tenant. It happens all the time. Mother and Father sell to children; spouses sell to spouses (divorces). As far as a subject goes, simple disclosure of the relationship and terms is usually all that’s required.

2. Having the above scenario in a comparable sale is not condoned. In #1 the lender has all the non-arms length information as part of the loan application and copy of the sale contract. In a comparable sale, it simply does not fit the accepted definition of market value. We do not normally have access to that contract nor reliable information on possible undisclosed discounts; inducements, special concessions, kicks backs, etc..

That looks like a tough read Don but I’d bet you’ve read it. Will find time to buy it one of these days. Would make a great desk piece.

https://www.amazon.com/s?k=blacks+law+dictionary

Oh look here, there is a definition just waiting to be read.

https://thelawdictionary.org/at-arms-length/

Beyond the reach of personal influence or control. Parties are said to deal “at arm’s length” when each stands upon the strict letter of his rights, and conducts the business in a formal manner, without trusting to the other’s fairness or integrity, and without being subject to the other’s control or overmastering influence.

Yeah, how exactly does that happen when the tenant is purchasing while currently being at the mercy or their selling landlord? Rent to own, not a situation I’d want to find myself in.

“BLACKS LAW” is the premier which holds to the definitions we have to use in protecting ourselves. “blacks” is compiled from old and recent court decisions. Some of these definitions go back the before we were separated from England. Arms length means more than relationships, it also refers to the dingles hanging from these relations.

The judicially ordered F.M.V., the friendly M.V. between neighbors, The Vacation- escape neighborhoods where institutional financing is not available and Multiple listing is less than 50% make simple explanations unreliable. A lot of like to be heard because we see so much advice coming from emotion, and we feel some be better grounded.

Buying and selling R.E, backed paper notes “Trust Deeds”, was a major part of the industry until the financial institutions became so big with guaranteed financing. Government guaranteed financing is changing and all financing is not the same. Beware!!

I don’t know where I picked it up, but i know it to be true. The term speaks to extra consideration necessary in the analysis of a transaction. It has nothing to do with financing, price, contract considerations(personal property), or value it is simply a statement on the relationship of the participants. A Non-Arm’s length transaction can absolutely occur within the definition of market value as the term does not define the level of bias or motivation. Just because I sold my house to my brother does not mean I gave him a better deal. However, if you have a choice between two comparable sales, I would go with the arm’s length transaction over the non-arm’s length.

In some fsbo scenarios the home may become shared for a time. The buyer may be essentially funding their parents retirement. Inter family sales have very high potential to be problematic. One has to look at the broader market to see if that sale lines up well with typical market expectations. Why bother if there are represented sales instead. Only sometimes do fsbo’s get a legitimate appraisal before the price is formed. Quite often they’ll form the price from avm figures or personal financial goals. If you’re pulling comp data directly from county records or something along those lines, you may never even know if a property was family to family or not.

The premise of the question is unnecessary, arms length is at least loosely defined already. One may even go so far as to argue that the lending climate, the skill, experience, and leverage differences between agents themselves may create a non-arm’s length climate of sale conditions. When agents walk the buyers home into a highest possible price, agency costs are financed, and everyone holds hands.

One may ponder if commission based agency under current lending conditions nullify any notion of ‘arms length’ in the first place. Because the agency fees are financed and not paid out of pocket, it’s all too easy for participators in purchasing to overlook inherent conflict of interests in the structure of lending itself. Higher price, higher commission. Commissions and cash, not thrift, is the primary motivating factor in price when dealing with sales conditions which utilize financing. People learn how back patting works in short order, it is the easiest skill to acquire in real estate.

Imagine a climate where all parties held agencies to a higher standard. Where thrift had a place at the table because everyone had to write agents a check for their agency at closing, where representative costs were not financed. Where the agency commission did not have an actual cash equivalent cost which was much higher due to amortized interest. People in real estate throw a lot of defined terms around having become familiar with them through repetition. Far fewer participators actually grasp the inherent conflict of interests at every turn. Banksters set up all these rules for their own benefit, true masters of illusion. The rest of us just play along for a little cut of the action, lining up data, signing paperwork, pushing fiat paper left and right.

Arms length is when you count the dollars, every single last one of them. Very few transactions actually qualify as arms under strict expectations of full accountability and legitimate checks and balances. Lenders earn the equivalent of all agency combined, through the process of financed agency fees. It’s a great way to mask devaluing currency with a constant rake off the top. Those are the things I think about when I constantly report ‘arms length’, while being purposefully shielded from actual financing term data. Report it how you want to, none of it matters anyways. These are the theories behind the audit the fed argument and Article 1 Section 10 on sound currency, they’re not just clever slogans. Thank you for reading and I’ll see you around through the looking glass.

Too many weasel words, too much to interpret. Blood or business is a neat phrase but too disconnected.

The worth of the deal is in the parts, the financing, the discount points, the extra stuff, the sail boat in the garage, the golf cart, the prepaid HOA’s. What was the solar deal? Did the seller keep the solar, did they move the turbine generator to a new site, was the family cow a Holstein or a Guernsey, was the onion crop $harvest the sellers or the buyers?

Private financing offers lots of packages, Bankruptcy offers lots of reasons for high interest rate financing, the buyers have incentives. Also an appraiser will ALWAYS explain The standard (No more than 3 points discount for a 4% loan of 80% LTV). OR maybe an all cash deal is an unexplained bargain. What are typical sales terms in a 55 plus development?

Where did you get that from James?

Arm’s Length Transaction: An Arm’s Length Transaction refers to a transaction between unrelated parties who are each acting in their own best interest. FHA Handbook,4000.1, 12/30/2016 page 4.

IF THEY ARE RELATED BY BLOOD OR BUSINESS IT IS A NON-ARM’S LENGTH TRANSACTION.