HOW IT WORKS: WHO’S INVOLVED?
The Role of 1031PropertyWatch as Broker/Representative
As a broker it is our job to bring buyers and sellers (sponsors) together. We work independently of the seller and represent the buyer in the transaction. We do, however, maintain a close relationship with all sponsors in order to objectively represent them and their properties to our clients. It is also the sponsor who pays our commissions.
We are often asked how we insure the buyer of our objectivity. The answer to this is twofold. First, Tenant-in-Common (TIC) properties are bundled with all fees and commissions fixed and non-negotiable. These costs can be found in the Private Placement Memorandum (PPM) available on all properties offered for sale. Buyers can be assured that the price is fixed and in that context fair for all investors, showing no favoritism or lack there-of for experience or existing relationships. Second, as a broker our objectivity should be directly proportional to the number of properties and sponsors we present to buyers with full and fair disclosure. We believe if buyers are able to objectively compare a number of sponsors and properties, less prejudice or undo favoritism exists for any one sponsor and/or property.
Note: A list of all major sponsors in the country is available to 1031PropertyWatch clients.
The Role of a Sponsor (Real Estate Provider and/or Seller)
A sponsor (seller), sources the property, performs property due diligence, garners the financing, arranges for asset and property management, and offers the property to potential investors/exchangers. Because an investor has a continued reliance upon the seller after the close of the property and because an investor will own the property for some time into the future, the role of the sponsor should be carefully considered.
The Role of a Qualified Intermediary (QI)
The IRS requires that the investor does not take possession of the proceeds from the sale of the property during a 1031 exchange. A qualified intermediary, also known as a “facilitator” or “exchange accommodator”, acts as a fiduciary over the proceeds from the sale of the property during the exchange period, and provides services to help keep the investor in compliance with IRS rules and laws. Neither 1031PropertyWatch nor OMNI Brokerage, Inc. is a QI.
What does a TIC investor look like?