Realtor 1031 Exchange Qualifying Questions
Posted by Andy Gustafson on Wed, Jun 02, 2010
The Realtor who understands a 1031 exchange is in a position to benefit over those Realtors who do not. Knowledge is power.
All too often when it is too late to initiate a 1031 exchange, I hear "Why didn't my Realtor tell me I should have considered a 1031 exchange?" Was the Realtor asleep at the wheel? What should the Realtor ask?
First, two sales commissions are better than one, right? I facilitated one exchange with five properties being sold and three replacement properties being purchased. How about eight sales commissions from one Exchangor? More importantly, the exchange must be completed in 180 calendar days. Exchangors are motivated to act within a short period of time.
1031 Qualifying Questions
What questions should the Realtor ask?
- Is the property for sale an investment or rental property?
- Is the replacement property an investment or for business use?
The next step is to provide the name and contact information of a Qualified Intermediary to listen and explain the steps of a 1031 exchange. Take the monkey off your back and toss the responsibility over to the expert. It's that easy. You don't need to get into the details.
The outcome of thirty percent of phone consultations is not to initiate a 1031 exchange for a variety of reasons. Perhaps, there is a loss that offsets the gain. Or the Taxpayer wants to cash out. Often, the decision to exchange or not is passed on to their accountant. Either way, the Exchangor is making an informed decision based on facts.
Conclusion
Next time your client or potential client calls to ask about selling a property, ask the two questions that will set you apart from other Realtors. More importantly, understand the impact of another referral from a satisfied client who sold and purchased a property with your guidance within 180 calendar days.
Two sales are better than one.
