Real Estate Professionals

Benefits of 1031 Exchanges for Real Estate Professionals

Knowledge is power! And knowledge of 1031 tax-deferred exchanges cannot only help your clients but also you. Knowing the exchange basics opens many new opportunities and the more you learn, the more you benefit.

Following are some of the many benefits of 1031 exchanges for real estate professionals:

Earn two commissions instead of one.

A 1031 exchange is a sale followed by a purchase. If your client is completing a 1031 exchange, he or she must purchase a replacement property! As soon as the old property is listed, begin working with your client to identify what he or she wants to buy (location, price range, property type, etc.)

Earn additional commissions.

Without the tax bill, some investors leverage their funds to diversify and buy several replacement properties instead of just one.

Earn larger commissions.

As your client has no large tax liability hanging over his or her head with an exchange, all of the sale proceeds can be reinvested. Your client can use those pre-tax dollars to acquire more expensive properties resulting in larger commissions for you.

Gain additional referrals.

We all get referrals from past clients who are happy with our services. Imagine the glowing recommendations you will get from the client who saved tens of thousands of dollars (or more) in capital gain taxes! Mention 1031 exchanges to everyone, even the seller of your client’s new property. Plant the seeds now because you never know when the time for a sale will come. Investors remember who told them about 1031 exchanges and will work with that Real Estate Professional when the time is right to proceed.

Increase your listings.

Providing information on 1031 exchanges is a great way to peak the interest of property owners especially those that would like to sell their property but don’t want to pay the taxes. Send newsletters or just a letter with some teasers to past clients as well as your prospects.

How  Real Estate Professionals Can Use 1031 Exchanges as a Sales & Marketing Tool 

Market yourself as an agent that specializes in 1031 exchanges.

Let’s face it, our clients prefer to work with a specialist and 1031 exchanges are definitely an area of expertise. List it on your on-line bios as well as the hard copy of the bio provided to your prospective clients.

Work 1031 exchanges into your everyday Standard Operating Procedures.

  • Whenever you are signing a Listing Agreement and you notice the Seller does not live in the property or use it as their vacation home, inquire about their intentions once they sell. Ask if they have considered doing a 1031 exchange and give him or her 1031 exchange information. 
  • Provide your contact information to 1031 CORP. and request a co-branded personalized “Hold on Your Money” or “1031 Exchanges Made Easy” flier that can be printed or emailed to interested clients. Request a personalized flyer
  • Provide a 1031 exchange brochure in every packet you give to prospective clients. Staple your business card to the 1031 brochures because people who defer gains are always grateful to the person who told them how and often recommend that person to their friends and associates. We are more than happy to provide brochures for you, just ask. Request brochures
  • List “Knowledgeable in 1031 Exchanges” as part of your bio in your contact information on the company website and your social media profiles. If you have your own website, be sure to list it there also. You can even provide a link to the 1031 CORP. website (www.1031CORP.com) or let us assist you in creating your own fact information to include on your site.

Educate your clients on 1031 tax-deferred exchanges.

  • Include information on 1031 exchanges in your newsletter. 1031 CORP. can help you prepare the article. Request an article for your newsletter
  • 1031 CORP. offers a 45 minute “1031 Exchanges Made Easy” webinar at 12:00 pm ET on the first Thursday of every month.  It is an excellent opportunity for you to introduce 1031 exchanges to your client and view the webinar together.  Why not invite them to your conference room and bring in sandwiches or coffee and bagels?  View our upcoming seminar Schedule
  • Host an investor seminar or webinar on 1031 exchanges. One of our experienced 1031 CORP. speakers can present the seminar and 1031 CORP. can help you promote it. Request a seminar or webinar for your investors
  • Provide information on exchanges on your website. We can help you develop the text and you can also provide a link to www.1031CORP.com for more comprehensive information. Request 1031 info for your website
  • Occasionally post information on 1031 exchanges on Facebook and Linked In and ask clients to contact you for more information.

Continue to increase your knowledge of 1031 tax-deferred exchanges.

Sign-up to receive Exchanging Times the monthly newsletter of 1031 CORP., with timely and informative articles, industry updates and notification of upcoming 1031 seminars and continuing education courses in your area.

FAQs for Real Estate Professionals

Is there additional work for the real estate professional when a 1031 exchange is involved?

Other than suggesting the 1031 exchange and putting your client in touch with 1031 CORP., there is nothing more you would have to do in a 1031 exchange. Of course, you have to sell your client’s relinquished property and help him or her find a replacement property but that is what you do best!

Why should I recommend a 1031 exchange?

You are in the ideal position to recommend an exchange when appropriate. Oftentimes the Seller is unaware of 1031 exchanges and misses the opportunity to buy replacement property with pre-tax dollars. Suggest a 1031 exchange any time your Seller does not live in the property and you may be able to help your Seller defer significant gains while earning a great referral source. 

Does the 1031 exchange affect my commission?

1031 CORP. charges a nominal exchange fee but it does not affect your real estate commission and it will be shown on the closing statement as always.

When should I get 1031 CORP. involved?

The knowledgeable Exchange Team of 1031 CORP. is always available to answer questions but does not have to be engaged until a sales agreement has been signed. Of course you can contact anyone at 1031 CORP. any time with questions.

What does 1031 CORP.  need to initiate the 1031 exchange?

Our Exchange Officer will need a copy of the signed sales agreement, contact information for your client and the closing details. Once we have this information, the exchange documents will be prepared and instructions provided to the closing agent. It is a very simple process.

If I did not include 1031 language in the sales agreement, can my client still do an exchange?

Absolutely! 1031 CORP. will prepare and have an assignment agreement signed at closing.

Does a 1031 exchange affect the Buyer of the property my client is selling or the Seller of the property my client is buying?

While the regulations require that the Buyer of the old property and the Seller of the new property are notified of your client’s intent to complete a 1031 exchange and that your client’s rights (but not obligations) in the respective sales agreements are assigned to 1031 CORP., we do not need their cooperation. 

Can my client sign the sales agreement for a new property before we have sold the old property?

There is no reason you cannot sign the sales agreement for the replacement property first. The dates the sales agreements are signed are irrelevant. However, it is imperative that the actual conveyance of the relinquished property occurs before your client acquires the replacement property.

What if we cannot coordinate the closings so the relinquished property sale occurs before the replacement property is acquired?

It is possible to do what is called a reverse exchange but this should only be done as a last resort. Contact 1031 CORP. for additional information on this structure.

Is there anything the real estate professional must bring to closing for the 1031 exchange?

No, everything that needs to be taken care of at closing for the 1031 exchange will be handled by the closing agent. The closing agent will receive instructions from 1031 CORP. well in advance of closing and we will review them prior to closing to ensure a smooth closing for all parties.

I’m hesitant to suggest a 1031 exchange because I don’t know enough about it.  What should I do?

As a real estate professional, you do not need to be an expert on 1031 exchanges but it is prudent to know how to recognize when an exchange might be advisable. An exchange works on virtually any real estate asset other than a primary residence or vacation/second home. The 1031 CORP. Exchange Team is always available to answer your questions throughout the exchange process, discussed a potential transaction or schedule a conference call or consultation with you and/or your client.

"This was my 1st 1031 exchange. Your company made the process easy and smooth! Good job from the whole team!"

-- Randeb Property & Maintenance, Inc., Shillington, PA

Need help? Contact our team to ask questions and find out how to get started.

Talk to an Exchange Team Member