What is an Arm’s Length Transaction?
Auctions is one of the best means to bring a true Arm’s Length Transaction and establish fair market value.
An arm’s length transaction is one in which the buyer/tenant and seller/owner act independently and have no relationship (by blood, marriage or unrelated business dealings) to each other, ensuring that all parties in the deal are acting in their own self interest, are not subject to any pressure or duress from the other parties, and are dealing from equal bargaining positions. Two strangers with equal bargaining power and knowledge of the property are likely to agree upon a price that is close to market value, as the seller will strive for the highest price possible while the buyer is striving for the lowest price possible. It’s assumed that an arm’s length transaction will be fair and equitable to all parties involved and will result in a fair market sales price.
Knisely Auction Staff