Looking for experienced realtor for 1031 exchange
We have a single family house in Richmond we'd like to sell and buy another property in LA in a 1031 exchange transaction. Would like recommendation for a great responsible realtor who is well versed in such selling scenario. Also, if you have done such transactions in the past, please share any do's and don'ts.
Thank you, Lindsey
Nov 6, 2017
Parent Replies
You'll want different realtors in Richmond and in LA; their business is very localized and you want an expert in each neighborhood. The realtor is not particularly involved in the 1031 exchange, although they can likely recommend to you the escrow company or companies and exchange accommodator company which will handle that for you. (FYI, the standard procedures for real estate transactions are handled differently, in a number of ways, in Southern California than they are in Northern California. Not a big deal, but you may very well use different escrow companies too.) Every major title company has an affiliated exchange company, and there are independents as well. You can price-compare or just follow your Richmond real estate agent's recommendation.
I did my first 1031 Exchange about a year ago, and it was definitely worth it, but a pain in the ass.
You probably know this, but the Richmond house has to have been designated rental property for two years. If you are planning to replace it with another rental house in Los Angeles, an L.A. realtor can do that for you. If you are planning to replace it with commercial property, you'll need a a commercial realtor, which was a very tough thing for me to find -- commercial real estate is a world unto itself, and many agents didn't return my calls, due to the booming market. I finally found a young agent, on the come, who was delighted to help me, and did. I turned a single family house in SF into a huge commercial property in Santa Rosa, and tripled the rent I was getting.
Most realtors have dealt with a 1031 situation, and will direct you to a trusted intermediary, which "holds" the funds" so you don't take receipt of them before you find a replacement property. Here's the hard part -- you have 90 days to identify the replacement. That's one hell of a lot of running around.
I believe you get a much longer time to close, though.
Be warned that you won't necessarily get more for you money in L.A. -- prices here have taken quite a hike and money flows through this city (I happen to be there right now) as it does through SF. But you can add to the amount you put in for the new property without penalty. You can also come up short -- if the replacement property is less than the relinquished property you just pay the taxes on the gain from the gap.
There are plenty of web sites that explain all this in detail, and they're pretty clear. I'm guessing you just don't want to be a long distance landlord. Or you might want to exchange for a house you can eventually move into -- that's perfectly legal to do, after two years. Hope this helps!