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Reverse 1031 Exchange
Buy First, Sell Second
The Reverse Exchange
The reverse exchange is an effective tool that can be used when an exchanger finds a property they would like to purchase before they have found a buyer for their relinquished property. Sterling Exchanges will purchase the replacement property on behalf of the exchanger and hold it until the exchanger has found a buyer for the property they intend to sell.
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In a reverse exchange, the 45 day identification timeline still applies, but is meant for the exchanger to identify which property of theirs they would like to sell. Similarly, the reverse exchange must be completed in 180 days just like the standard delayed exchange. There are two variations to this type of exchange, please see below.
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Variation 1
After Sterling Exchanges has purchased and taken title to the replacement property, we will trade it to the Exchanger for the relinquished property. We will keep the relinquished property until a buyer has been found.
Variation 2
The second kind of reverse exchange also involves Sterling Exchanges purchasing and taking title to the replacement property. In this variation, Sterling Exchanges will hold the replacement property, rather than trading for the relinquished property. When a buyer is found for the relinquished property, the exchange is complete.