HELP! Seller ONLY wants 1031 TRADE! How do I change their mind?

[Tom Anderson]

Hi BP, 

I found a commercial property that I really like but the agent is telling me he won't share the financials on the property because the owner isn't ready to "market" the property unless he finds a 1031 Trade. It's already on LoopNet so our definitions of "Market" are clearly different.  I'm kind of at a loss here as I've told the selling agent there may be an opportunity for me to pay in all cash and pay way over ask, but obviously only if the numbers work for me. 

I've never run into someone only willing to do a 1031 Trade and since I don't have a property to trade down to I don't know how to go about convincing this seller to sell me the property and just do a 1031 exchange within the normal window of time, like everyone else in commercial real estate. 

Any advice? 

Am I crazy in thinking this person is looking for a needle in a haystack when looking for a 1031 Trade?  Trade only? They'll have to find someone willing to do a very large down Trade as the seller (like most normal people) is trying to do a 1031 Trade up, to a much larger property. 

Thanks in advance! 

Tom

[Dave Foster]

@Tom Anderson, I think the agent is referring to a regular1031 tax deferred exchange.  It does not have to be a trade of his property for yours however.  He can initiate a 1031 exchange by selling his property to you, having the exchange documented on the settlement statements and having a qualified intermediary involved to handle the process.  From the day he sells to you he has 45 more days to identify his potential replacements.  It is this identification period that is worrying him.  He wants to have his replacement property lined up and waiting.  

So the answer is for you to offer him a contract allowing him an extended closing to accommodate his 1031.  That eliminates his timing angst.  It also allows you to lock  in a price and if he takes a while to find his replacement you are the benefactor of all the appreciation to the building after you execute the contract.