Quote from FHA Single Family Housing Policy Handbook The complication could be due to the different wordings of its definition provided by various entities.įor instance, FHA seems to place greater emphasizes about meeting the market value.Īn Arm’s Length Transaction refers to a transaction between unrelated parties and meets the requirements of Market Value. It seems that appraisers have different interpretations of what constitutes an arm’s length transaction. Different Definitions of Arm’s Length Transaction Lead to Confusion In this post, I’ll talk about the different interpretations of the arm’s length transaction among entities, why does it matter, what are some guidelines to handle non-arm’s length assignments. They have no interest in the other party’s benefit. Their decision is merely based on maximizing their own interest. So what is meant by Arm’s Length Transaction? An arm’s length transaction is that both the buyer and seller are unrelated to each other. ![]() I also noticed that some appraisers might not verify this info in their usual practice. ![]() However, one thing I haven’t touched on is whether the real estate transaction is an arm’s length or not. I wrote a number of articles talking about the different factors which could affect an appraisal – for instance, its condition, feature, and neighborhood. (**) Disclosure: This post may contain affiliate links, meaning our company, JCHQ Publishing will get a commission if you decide to make a purchase through the links, but at no additional cost to you.
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