What is an "arm's length sale" of property?

I found a friend's house was sold to an investment company and the auditor calls it an arm's length sale.

An "arm's length sale" means that the buyer and seller had no prior connection. The sale took place through normal negotiation and there was no undue pressure on either party with regard to the final price.

If you bought a house from a relative, (for example), they could argue that it was a "not arm's length" sale and it could affect the final assessment.

An "arm's length contract" means that it is not done with any one or any business that is related.
e.g. A company doing business with one of it's subsidiaies.

Claude pretty much nails it.

Just to elaborate, 'arms length transactions' are often cited to justify the value of other properties, while homes that are exchanged between related parties are frowned upon by appraisers to build an opinion of value.

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