How to Find a Qualified Intermediary


Successful real estate investors come from a wide variety of backgrounds and employ an assortment of investment techniques. All have their own unique approach to owning, managing, and selling assets.  However, I believe successful investors have one common element: a team of trusted advisors to help navigate and execute their investment approach. The world of investment real estate is simply too complex to go alone.

Building a strong, effective team of preferred service providers is a critical component of successful real estate investing. Attorneys, CPAs, property management personnel, contractors, brokers, title and escrow professionals are just a sampling of the individuals who can be contributory or detrimental to an investment opportunity. Vetting service providers that will enhance, rather than detract from your investment, can be difficult unless you have a framework for evaluation.

We work with many clients who are navigating tax-deferred 1031 Exchanges for the first time. Within the Exchange world, the Qualified Intermediary (“QI”) is one of the key service providers that can facilitate a smooth and orderly Exchange or quite the opposite. Since owners cannot take possession of the sales proceeds from their relinquished property, a Qualified Intermediary (QI) serves as “Exchange escrow” and holds on to the Exchange proceeds until the replacement properties have been identified and funds are released to purchase them. We regularly assist clients in their selection of which Qualified Intermediary’s services to utilize for a 1031 Exchange. Here is how we evaluate them:

Insurance – What levels of insurance do they have, and what situations do their policies cover? Types of insurance relevant to Exchanges are fidelity bonds, errors and omissions insurance, and written performance guarantees. Are they willing to show you the policies they claim to have? Are the policies sufficient to cover the Exchanges they have in process at any given point?

Fee Structure – Most Exchanges are relatively straightforward and include one property Exchanged for one or more properties. The costs associated with these Exchanges should be low and defined. More complex Exchanges such as Improvement Exchanges and Reverse Exchanges are more involved and often have variability in the fee structure – however, the fees should still be defined in advance of the Exchange.

Internal Security Controls – Exchanges involve moving large sums of money from one party to another. Surprisingly, the industry is not regulated at the federal level. However, the industry trade association for QIs, the Federation of Exchange Accommodators, has defined best practices for QIs to adhere to in order to protect a client’s funds. Understanding and gaining comfort with a potential QI’s policies regarding data security, cyber security, and identity verification are of the utmost importance.

Client Centric Counsel – Quality QIs provide value to their clients through quality counsel to the Exchanger regarding what is and is not legally permissible in an Exchange. QIs often disclaim any counsel provided by saying that the client should consult their own attorney for liability purposes. However, a good QI will not hesitate to put one of their seasoned attorneys on the phone with an Exchanger if they have questions regarding the Exchange.

Bottom Line

Tax-deferred 1031 exchanges may present a tremendous opportunity for wealth preservation and asset re-positioning, provided an investor has the right team in place. If you are interested in learning more about the opportunities available through tax-deferred exchanges or would like to discuss our firm’s preferred qualified intermediaries, please do not hesitate to contact us at 888-744-9839 or email

The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Such offers are only made through the sponsors Private Placement Memorandum (PPM) which is solely available to accredited investors and accredited entities. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million dollars exclusive of primary residence) and accredited entities only.  If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee profits or guarantee protection against losses. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor.  This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation. Securities offered through Aurora Securities, Inc. (ASI), Member: FINRA/SIPC. Advisory services offered through Secure Asset Management, LLC (SAM), a Registered Investment Advisor. ASI and SAM are affiliated companies. Real Estate Transition Solutions (RETS) is independent of ASI and SAM.  

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