Good Idea / Bad Idea???

[Mark Bookhagen]

Hi BP,

I am about to buy an FSBO. The seller plans to take the proceeds and buy another investment property. His price is "firm because of capital gains taxes that he will have to pay when he sells."

My question is, do you think there is a downside in telling him about 1031 exchanges in hopes to get him more flexible on price. Please let me know of any pitfalls that you can see by doing this. 

I won't be recommending anything to him, just telling him that some people have done it this way.

Thanks in advance!

[Steven J.]

Be upfront about the 1031 exchange. Maybe you don't do this deal but he may be a help in the future. If he sees that you have his interests first you may very well see the favor returned sometime down the road. If not at least you'll feel a sense of good karma.