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The Role of the Agent for a Successful 1031 Exchange

    Man with a beard in a grey suit adjusting his black polkadot tie looking off to the right of the image. Text to his left says "The Role of the Agent for a Successful 1031 Exchange"

    A successful 1031 Exchange requires the successful completion of a transaction that involves investment property that must follow certain guidelines, as well as be completed within multiple deadlines, otherwise the taxpayer will most certainly pay as much as 30% in capital gains taxes. That’s a lot of responsibility there, responsibility that requires knowledge and expertise.

    Yet so many attempt to complete the transaction on their own. They either have multiple agents out looking for opportunities or they are looking for the replacement properties themselves. In fact, many taxpayers have no clue as to all the options that are available to them! Here’s the problem, there are little to no sources of exchange education provided by real estate brokerage firms. Yes, there are some national brokerages that may mention the five main rules of the 1031 exchange, which is clearly important, but what about a step-by-step, “how to” explanation? What about a plan with a timeline before the actual legal timeline starts?

    No one actually talks about the role an agent should play within the conversation of planning, let alone the completion of a successful transaction that complies with the rules and regulations of the 1031 Exchange, while also satisfying the needs of the taxpayer. Go ahead and look yourself, all you will find are articles that are posted on by Qualified Intermediaries (QI) or Accommodators’ sites or the new darling of the neighborhood, DST (Delaware Statutory Trust) “providers”. Every once in a while, you will see a minimal explanation from a retail listing broker.

    Much of this content talks about the five main rules of the exchange that we discussed earlier which is important for a successful exchange, but rarely do you find a breakdown of the step-by-step process or better yet, the role of the agent/broker who should be representing the exchange buyer. 

    It occurs to me that very few exchangers get represented at all. Many deal directly with the retail listing agents or DST providers, when in all actuality the exchange buyer should have an agent/broker representing them before they close on their down-leg (property to be relinquished). This exchange transaction is like any other and buyers should be properly represented. Be sure to follow me as I will later discuss the 1031 and dual agency.

    A real estate agent can play an important role in a 1031 Exchange, which is a tax deferred exchange of real property. Here are some ways a real estate agent can help:

    1. Provide expertise on 1031 Exchange rules: A real estate agent can provide expertise on the rules and requirements of a 1031 Exchange. This includes understanding the timelines, requirements for identifying and acquiring replacement properties, and other important considerations.
    2. Facilitate the sale of the relinquished property: A real estate agent can help the client sell the investment property they wish to be relinquished. This includes marketing the property, negotiating with buyers and closing the sale. This provides much power to the agent as it will put them in a better place to control both transactions, the sale of the down-leg and the purchase of the up-leg, which is a huge benefit to the taxpayer.
    3. Identify and find replacement properties: A real estate agent can help the client identify and locate potential replacement properties that meet the requirements of a 1031 Exchange. This includes understanding the client’s investment goals, identifying suitable properties and helping the client evaluate the properties.
    4. Coordinate with other parties: A real estate agent can help coordinate with other parties involved in the 1031 Exchange such as the qualified intermediary, title and escrow, lenders and other professionals. This can ensure a smooth and timely exchange process, providing a successful 1031 Exchange.

    It is important to note that a real estate agent cannot provide legal or tax advice, so it’s always a good idea to consult with your CPA, a qualified attorney and qualified intermediary when considering a 1031 Exchange

    Any agent can do this, just like any dentist can fix a root canal. I don’t know about you, but I want someone who does it every day. Rather than observe what’s not out there, focus on the importance of being represented properly with someone who focuses their practice on completing successful exchanges.

    If you are an investment property owner who is interested in a no obligation, private consultation, please visit, or contact James Bean of SVN-Rich Investment Real Estate Partners, CA DRE# 01970580, at 805-779-1031 or email at

    If you are an agent/broker, I am happy to discuss strategies with you on how to best serve your next listing client in preparing them for a successful exchange. Please visit the site and click on the Agent’s button located at the top right-hand corner of the Home Page!

    Don’t know what certain terms mean?

    Click here for a Glossary of Terms: 

    Please stay tuned and follow me on LinkedIn, Twitter, Instagram & Facebook @1031BrokerJames while keeping a look out for our exchange-specific content and coming soon, our YouTube Channel!

    All information is deemed to be accurate, and not advice. All investors/taxpayers should consult their CPA, tax attorney and investment advisors.