Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Real Estate Agent
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 7 years ago on . Most recent reply

User Stats

6
Posts
1
Votes
Lindsey Deno
  • Rossville, IN
1
Votes |
6
Posts

Etiquette on utilizing RE Agents

Lindsey Deno
  • Rossville, IN
Posted
Hey everyone! My husband and I just did our first unplanned flip and are currently looking for property to reinvest our gains in(1031). I decided to share our story on fb(good idea or not, I'm not sure) to get the word out there. It drew in several contacts, and I know multiple real estate agents within my network, some closer friends, others acquaintances. However, we haven't decided if we want to work with one of these agents, or if we want to find an agent who is more involved in the investing side. A few of the agents have been in touch with me since I posted, as they are keeping their ears peeled to what we are looking for-- multi family units. Is it good etiquette to begin working with several agents, but not necessarily work with the same one all the time or for every deal? I plan on getting my real estate license in the future too. Thanks in advance!

Most Popular Reply

User Stats

9,064
Posts
9,418
Votes
Dave Foster
#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
  • St. Petersburg, FL
9,418
Votes |
9,064
Posts
Dave Foster
#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
  • St. Petersburg, FL
Replied

@Josh Deno,@Lindsey Deno,

I think you may have some bigger issues than just Intent.  But to start there - Your intent in purchasing that property must have been to hold it for productive use.  How do you hold land for productive use?  Well you farm it, share crop it, hold it for appreciation, build a house and rent it, turn it into a hunting preserve, Operate your business on it, store your business equipment on it, hold it until best and highest use appears, etc.

In other words there could be many ways to demonstrate your intent to hold that property for productive use.  Planning to build and hold as an investment is very different from planning to build and sell.  The IRS does not let you use 1031 if you were simply going to develop it because as a developer you're creating inventory which means that your intent was not to hold for productive use but to create and sell inventory.

You and your accountant and QI (at $265/hr) need to agree on your intent and how it is to be demonstrated.  It's actually pretty lame that a title company would agree to act as your QI and yet not pre-qualify your situation or agree to answer questions about your specific situation without charging  you.  

But after hearing the entire scenario you've got going now here's what may be your bigger problem.

A title company legally can do your 1031 exchange.  In fact most title companies have what are called "captive QIs".  These QIs are usually subsidiaries of the title underwriter.  But these QI's in general follow the process that @Lauren Speidel, described very well.  In most cases a title company will not act on their own to be your QI for several reasons.

1. They don't know what they're doing and know it so they won't proceed.

2. They don't have access to the proper procedures and documents to place on closing documents.

3. They don't have a mechanism in their escrow accounts to prevent you from having constructive receipt of the funds.

I don't know if there was any of the required documentation present in your situation - The Exchange agreement, Assignment of contract  rights, and Notice of assignment.  My guess is that at best, you've got a valid exchange going but you're going to pay through the nose to have the process done and documented correctly so you can rely on it.  

The worst case is that the title company is  simply holding your funds (which means that you can ask for them at any given point in time - constructive receipt) and you are acting as your own QI - which is not allowed in a deferred closing exchange.

  • Dave Foster
business profile image
The 1031 Investor
5.0 stars
97 Reviews

Loading replies...