An agent in our office wants to buy an investment property. She is considering purchasing one of our short sale listings (listed by another agent).. She has a previous working relationship with the seller (he was her personal handyman).

What is the best way to structure her purchase so we are not violating the arm's length? Or is it a violation no matter what we do?

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Check with the seller's lender. If they approve of the sale, then there is no violation. Good luck!

disclose/disclose/disclose. 

You need to read the actual disclosure for an arm's length transaction.  They do vary a bit from lender to lender.  If in reading it, one feels that they are in violation and they sign it anyway, it's fraud.

 

If questionable, ask the lender.  Believe it or not, some do make exceptions.  But some do forbid agents and agents of the same company buying these.  Don't see it often but a couple of times.

Thank you so much for the responses. I called the bank and they said as long as they aren't related, it's ok. I was actually surprised. I assumed a previous working relationship would violate it.

That makes sense.  Most I have seen would forbid working partnerships, but we have business relationships with hundreds of people.

 

The main concern is that there is no insider game going on.  You did the right thing in asking directly for clarification.

 

Steele

Cindy, make sure you talked with someone who knows and not a rep with an opinion.  This is usually not clear cut so getting a real answer from an authority can be tough.  Standard BofA form includes a business relationship as a no-no.  What you might find is that you have gone through months of work and get down to "have your buyer sign this form" just before approval and that is when they officially say no.

You can try to ask for the arms length transaction form - you might actually get it before you need it.

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