![]() Implementing the UAD changes will give the GSE’s, and HUD starting in January, the ability to data mine appraisals and create a huge data base. ![]() “An arm’s length transaction is characterized by the following (1) the absence of a relation between the buyer and seller (2) a selling price and other conditions that would prevail in an open market environment (3) transaction costs paid by the seller that are considered both reasonable and customary for the market in which the property is located and (4) the adherence to ethical standards of conduct by all parties involved in the HECM short sale transaction, including the borrowers (or the estate), mortgagees and appraisers.” “ A transaction between unrelated parties who are each acting in his or her own best interest.” ![]() These are the types of transactions that lender’s believe constitute and make-up “Market Value” as defined by Fannie Mae and HUD.įrom The Dictionary of Real Estate Appraisal 5 th Addition Appraisers are required to identify whether the sale is one of the following: a short sale, REO, court ordered, estate sale, relocation, non-arm’s length transaction, arm’s length transaction, or a listing.ĭefinitions of an arm’s length transaction:Īn arm’s length transaction in real estate is when neither party involved has no relationship between each other, and is acting in their own best interest. The GSE’s (Fannie Mae and Freddie Mac) and HUD (FHA) have gone out of their way to identify whether the comparable sales used within an appraisal are arm’s length transactions with the advent of the new UAD requirements. ![]() Apparently not all appraisers must be doing this, because I get a lot of Realtors telling me that this is first that anyone has asked them these questions. For all of my appraisals I always contact the agents involved to verify if the sale actually closed, and whether it was a arm’s length transaction. ![]()
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