Problems / Wishlists when working with QIs in 1031 exchanges

[Henri Chow]

Hi all,

My partner and I are interested in making certain types of 1031 exchanges easier and cheaper for investors by fully automating the role of qualified intermediaries (QIs) online. We want to make our product as helpful as possible and would love your input. 

For investors who have done/tried to do simple 1031 exchanges, what steps in the process of working with QIs did you find frustrating? Was there a service that you wanted your QI to offer that they didn't?

For QIs, is there a step in the services that you provide to your clients that you find frustrating (i.e. communicating with third parties, establishing escrow accounts, etc)?

Any and all feedback is welcome!

[Bill Exeter]

Hi @Henri Chow, 

As a Qualified Intermediary, here is what I can tell you.  This has been tried a number of times before and has always failed.  The 1031 Exchange process is complicated.  Investors do not know what they do not know.  They complete "fill-in" fields through an online Qualified Intermediary, which often had incomplete or inaccurate information.  They complete their identification of their replacement property through "fill-in" fields, which often violates one of the identification rules. Etc.  It boils down to the old adage: garbage in, garbage out.  Of the two QIs that I know of, one spent so much time correcting information that she finally stopped offering the online solution, while the other ended up in litigation because one of the 1031 Exchange transactions that he administered was disqualified by the IRS and the investor sued him.  Easier and cheaper are no substitute for experience and expertise when it comes to the administration of a 1031 Exchange.