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Are arm's length transactions considered a real estate deal?

Deals between family members or companies with related shareholders are not considered arm's length transactions. Arm's length transactions are commonly used in real estate deals because the sale affects not only those who are directly involved in the deal but other parties as well, including lenders.

What is an arm's length transaction?

Fair and Square Real Estate Sales Arm’s length transactions may sound like something that has to do with buying shirts, but they’re a big part of the real estate business. So what is an arm’s length transaction? Turns out, it doesn’t mean you’re any less involved in buying or selling a home.

What is a non-arm's length transaction?

When applying for a Federal Housing Administration (FHA) loan, a non-arm’s length transaction is known as “ identity of interest.” Real estate transactions fall into two categories: arm’s length and non-arm’s length. Arm’s length transactions are what most people engage in when they purchase a home.

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