Once the game plan is formed and the client understands it, follow it as closely as you possibly can.
When you’re selling the relinquished property or the down-leg property, exchange for terminology, you have to demand a specific deadline of all offers.
Require proof of funds. How qualified is this person that’s making the offer. Also require a loan pre-approval letter. You have to do this. You have to know how solid that transaction in fact would be.
Make sure that you have waver deadlines on their due diligence process, not so much that you force them away from the property but don’t allow them to wander.
The concern maybe this one – that person may have an exchange and they’re trying to line up as many properties and get as many properties under contract as they possibly can. Then they’re going to stand back and select slowly the one that would be best. You’re sitting there waiting for paint to dry and you aren’t even in the game but you couldn’t identify that by the fact and how they had made the offer.
I like to ask the question as I receive an offer on my client’s property “is this going to be a tax deferred exchange?” Normally they’ll have the wording in there but then I’m going to ask a few more questions “has this property been identified as one of the 3?” What I’m attempting to find out are they past their 45-day period. That puts me in a stronger position. I have to be in the strongest position possible in representing my client if we’re going to go after a tax deferred exchange on our own.
“How many properties have you identified?” If they say 6 or 8 of them, then I know I’m just one of a whole string. I’m not sure if I’m going to take this offer particularly seriously. That’s not to say we wouldn’t take it, because I may be able to use it as negotiating fodder for another offer that comes in. I might say to them “I’m not sure why I would take this offer. I’ve got a better one on the table.” What am I trying to do? Entice a higher price from that person in representing them.
“Is this property required for the tax deferred exchange?” Now as I go after the replacement property, I’m going to also be very careful to go for a very tight game plan. Make sure that my loan has been pre-approved whatever size loan I need in order to cause a fully tax deferred exchange. I’m making sure that I’ve got a qualified lender, that my client hasn’t gone to someone who has the reputation for not being able to perform.
Watch those issues and you’ll have a successful exchange.