Wanting to do a 1031 Exchange on Income Property, Help!

[Alysa Phalen]

Good day!

I wasn't sure which category this applied to (1031 exchange, real estate sale, or property manager) but I will start in this category for now.  

I inherited a 9 unit multi-family in Fla in 2009 with no mortgage that I would like to do a 1031 exchange to Denver (I know, Denver is a tough market!) but I live in Denver and I am not making money on the Fla income property due to all the flood, hurricane, wind, commercial insurances, taxes, property manager, etc.  

So I was researching around at different real estate agents to list the property and found one just yesterday, and when I called my Property Manager he was very upset (he has been the property manager for the whole time I have owned it, 9 years) and kept saying "Why don't you give me/my broker" a chance??  and "What about my commission?"  I was very confused for I knew his wife was a real estate agent but never knew he was.  (I know that seems unbelievable!).  And he just signed with a new brokerage firm at the end of last year but I didn't think that changed anything.

My question is, I don't see anywhere in the listing agreement or Management Agreement by the new broker about having to use my property manager to sell my apartments?  After having talked with an extremely smart, aggressive (maybe more assertive) but "definitely on top of things" real estate agent yesterday who emailed me all the different marketing materials she uses (I was really  impressed!) and how she is going to talk to each tenant about their lease and fix things up, etc, I just know from experience with working with my property manager that all he would do is put it on the MLS without any marketing (in fact, that is what he said on the phone) and I know for a fact he cannot offer me what she can .  He probably would be able to offer me reduced commission though, so their is that.

Any advice from anyone who has been through a transaction like this or has an opinion on what is best would be greatly appreciated!  

Feel free to PM me if you prefer.

p.s. I apologize in advance for not being more educated, I am in the process of learning but it helps me so much to get feedback here.  It was hard for me to research this topic as I didn't find any matches or similar situations.

Thank you!

Alysa

[Dave Foster]

@Alysa Phalen, It doesn't sound like your current property manager is much of a go getter.  Unfortunately all professionals aren't created equal.  It's understandable that any property manager would also like to be the listing broker for sale.  And normally they would be the best person to do so.  That's a reasonable hope and goal.  But it's not an entitled right unless that is spelled out in your management agreement.  And the professionals you want to work with are those who view your business as a privilege not an entitlement.

In your case I think there's even more background than that.  I'm guessing there's a reason you didn't approach them first. And I'm guessing that it's probably their lack of proactive communication and response that had you look elsewhere.

The issue that muddies the water is that he is your manager and the one who is supposed to be the point of contact with your tenants.  It could get ugly real quick if you've got a realtor talking to tenants, a grumpy manager, and confused tenants being subjected to all.

If you want another realtor to handle it then fire that manager now - get your keys back pay whatever you need to but get them out of the picture.  Maybe that new realtor will take it on while being sold.  But make sure that the realtor you're thinking of is really up to the task and can walk the walk.

Otherwise, a reduced commission in exchange for less hassle isn't a bad trade off.  a 9 unit in St. Pete isn't going to last long.