Agents and Brokers
As an Agent or Broker of assets that are often included in 1031 exchanges, you’ve probably heard more than one presentation from a QI about deferment of capital gains taxes and the mechanics of a typical exchange. Based on our experience of delivering presentations to a number of commercial brokerage around the country, we are pretty sure of the following:
- Reverse exchanges are not well understood by most agents and brokers. Many Clients attempting to invest effectively in today’s difficult real estate market need to be aware of all the tools at their disposal, especially those that can increase their economic benefits and favorably control the timing of their transactions.
- A reverse exchange is a vastly superior approach for most investors in commercial real estate (especially if the properties are income producing) because it can increase tax deferment potential, increase Return on Investment and give them tools to better manage the timing of transactions and the utilization of assets.
- There are distinct advantages for you if your Client does a reverse based on your suggestion — not the least of which is the increased potential to represent your Client for both the New Property acquisition and the Old Property sale.
- The QI community has been hit with a triple whammy, so to speak, involving the decline in real estate values and transaction volumes, the flight to safety for cash and the long-term collapse of interest rates. Many, many QIs have left the business and many more are — for lack of a better descriptor — "comatose" while they wait for interest rates to rebound. Whatever your assumptions about the QI industry, this is the time to take another look and make sure that your view is accurate and, more importantly, that your Clients’ view is also up to date.