what is an arms length sale in real estate?

Arms Length Transaction is often used in a Foreclosure, bank-owned or distressed property, and sometimes in a flip by an investor. It means the buyer or buyers agent is not directly related to the purchaser or the seller or the agents involved. So no Friends, Family, or agents themselves doing the purchase or sale of the property.

An arms length sale in real estate is when two parties enter into a transaction without any involvement or influence of a third party, and each party is acting in their own best interests and for the same value. It is usually done by parties who do not have any relationships or connections with each other.

When two or more unrelated and unaffiliated parties, are in a transaction, acting independently and in their self-interest.

It means there is no relationship between the 2 parties. Therefore, there is no influence from 1 party to the other.

It means not a related party (ie, family, friend, etc). You maybe wiling to accept a lower price from a family member, making the transaction NOT arms length.

“A transaction between unrelated parties who are each acting in his or her own best interest.”