In order to do a 1031 exchange you must us a qualified intermediary to document the process. 

However, when he sent over the term sheet, it stated 2 points and 1 pt to an intermediary.

A reverse or construction exchange - the 1031 intermediary takes title to the lot and holds it for up to 180 days while the construction is completed. 

Speak with a "qualified intermediary(QI)" about what you can reinvest your gains into, and keep your accountant in the loop.

It is really an additional and separate process where your qualified intermediary forms a holding entity called the "exchange accommodating title holder" and takes title to the new property and holds it for you until your old property sells.More complex, More expensive, and the financing of the new property can be tricky. 

Real Estate Investment CalculatorsBiggerPockets BlogPath to PurchaseMortgage LoansFind a ContractorReal Estate AgentsHard Money LendersReal Estate ListingsTop ContributorsNatalie KolodijCharlotte, NC3.04ScoreChad KolinskyRamsey, NJ2.78ScoreEdward FernandezLake Forest, CA2.63ScoreBill BrandtLas Vegas, NV1.64ScoreMichael SkoczylasSouthfield, MI1.64Score1031 Exchanges Trending DiscussionsGetting Creative with 1031 Exchanges 4 RepliesCan a 1031 intermediary suggest an investment?

I would recommend that you identify a qualified intermediary for the exchange and ask a lot of questions. 

They are simply wishing to document the exchange on the settlement statement and have a qualified intermediary hold their proceeds while they find and purchase their replacement property.  

It costs a bit of money to set up a 1031 exchange with intermediary etc so doubt that you’d come ahead by much in doing a 1031 for such a small gain, since your tax would be $1500 or less in best case scenario ($10k gain)

@Robert Duffer i assume you used an intermediary when you sold and they are holding the funds for you?