What is a non-arm's length real estate transaction?

Non-arm’s length transactions are business deals between two parties with a preexisting relationship, such as family or business partners. Non-arm’s length real estate transactions can be tilted in favor of one party and may often result in unfairness or manipulation.

What is an arm's length transaction in real estate?

Arm’s length transactions occur when two parties who don’t have a professional or personal relationship participate in a real estate deal and each side acts in their own self-interest. Purchasing a home from a stranger counts as an arm’s length transaction. Are Non-Arm’s Length Transactions Illegal?

Should you buy a home through a non-arm's length transaction?

And in most cases, the property seller is a stranger whom you’ve never met. However, another popular option when buying a home or investing in real estate is doing so through a non-arm’s length transaction (NAL) — a deal with someone you know, such as a family member or close friend.