Click here to learn more about direct and delayed exchanges.

  1. They (direct exchanges) save you the extra time, money, grief and risk of selling and then buying in the traditional way ("delayed" exchange). See 3, 7, 12 and 13 below for risks saved (eliminated) by a direct exchange.

  2. They are an ADDITIONAL WAY (opportunity) to sell when you may not have sold in the traditional way. They are also an additional way for buyers to purchase (exchange for) your property. Many will buy your property "only via an exchange." An exchange is both a sale and a buy.

  3. They eliminate your risk of someone else buying the property you want before you sell your property. That assumes "your seller" will accept your property in exchange or a 3-way exchange can be completed or I buy your lesser property in lieu of a cash commission so you can buy the property you want.

  4. They conserve your cash or allow you to buy property requiring more cash than you have.

  5. They eliminate buyers and Realtors avoiding your property due to your sale being contingent on you buying replacement property. For example, if you offer your property "For Sale" contingent on you buying other property, you'll be at a disadvantage because many buyers (i.e. 1031 buyers) and Realtors avoid sellers who need to buy other property before selling (closing escrow).

  6. They eliminate sellers and Realtors avoiding you due to your purchase offer being contingent on you selling property. For example, if you submit offers to buy property contingent on you selling your property, you'll be at a disadvantage because many sellers and Realtors avoid buyers who need to sell property before purchasing (closing escrow).

  7. They eliminate your risk of not buying replacement property as planned. After an exhausting traditional sale, sellers often do not focus on buying and sale proceeds are spent (investments, vacations, toys, etc.) or lost (poor investments, theft, casualties, etc.) reducing cash available to purchase replacement property. And even if you saved all sale proceeds but delayed purchasing replacement property in a market of rising property values (inflation), the same sale proceeds will buy less property due to the rising property values.

  8. They help you and your equity buyer qualify for new loans for these two reasons: 1) Lenders ignore current loans in new loan qualification process due to being paid off on same day new loans are funded; and 2) Exchanging equity along with cash in hand lowers loan-to-value ratios.

  9. They eliminate you storing your belongings and your short or long-term rental after selling your home while you look for a replacement home. You simply move everything to your new home after closing exchange escrow (vs. moving twice). Not all landlords rent short term and those who do, charge more.

  10. They eliminate you dealing with renters or a vacant unsold home (holding and opportunity costs) while occupying your new home.

  11. These 3 advantages apply if your "direct" exchange needs to qualify for a 1031 tax-deferred exchange. Before deciding to sell, buy, exchange or hold (do nothing), you are advised to consult with a qualified tax professional on matters including but not limited to verifying these 3 advantages. David Hector is not a qualified tax professional.

  12. They save you the intermediary fees paid in a 1031 tax-deferred "delayed" exchange.

  13. They eliminate your risk of not properly identifying the replacement property with the I.R.S. (within 45 days) and not properly closing escrow on your replacement property (within 180 days) in 1031 tax-deferred "delayed" exchange (fail to defer tax).

  14. They eliminate the 45 and 180 day time pressures in 1031 tax-deferred "delayed" exchange that can force you to pay a higher price and buy property you ordinarily wouldn't.

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David M. Hector
Real Estate Brokerage
DRE # 00796981
Office: (530) 893-5533
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Email: dh@davidhector.com

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