Selling Properties

  1. Benefits of Using a Real Estate Agent: At Silverstone Commercial, we handle advertising costs, MLS services, online advertising, and other expenses such as flyers and signs.
  2. Need for Legal Advisor: While not always mandatory, consulting with a legal advisor and tax accountant can be essential for ensuring that all aspects of the property sale are handled correctly and to protect yourself from potential liabilities.
  3. Commission Negotiation: Real estate commissions are negotiable but paying less doesn’t always mean you’re saving money. Agents have so much time to spend on listings and finding potential buyers, potentially limiting your property's exposure.
  4. Questions for Real Estate Agents: When interviewing agents, inquire about their specialization, marketing strategies, comparables, and how they determine property value.
  5. Understanding Cap Rate: Cap Rate is a crucial metric for income properties, representing the net percentage return on the property. It helps investors determine the value of a property relative to its income. Our agents work with you to understand how to value properties based on Cap Rates and other factors.
  6. Lease Types: Different types of leases include Gross Leases, NNN Leases, and Full-Service Leases, each having distinct responsibilities for landlords and tenants regarding property expenses. When selling or purchasing a property, understanding the property’s lease structure can impact the property’s value.
  7. Common Area or Load Factor: This refers to shared spaces within a property that may have additional costs associated with them, either included in the lease rate or added as a separate charge. Many landlords do not understand how to calculate load factors correctly and this again can impact the properties value and/or rent one can achieve from the property.
  8. Property Inspections and Disclosures: Full disclosure of property conditions and information is essential. Omitting crucial details can lead to legal complications even in "AS IS" sales.
  9. 1031 Exchanges: Understanding how a 1031 Tax Deferred exchange works
    1. Timing: Understand the strict timelines associated with a 1031 exchange. From the close of escrow, sellers have 45 days from the sale of their relinquished property to identify potential replacement properties and 180 days to close on the purchase of one or more replacement properties. We work with 1031 exchange specialist to make sure your exchange goes smoothly.
    2. Qualified Intermediary: You must work with a qualified intermediary (QI) to facilitate the exchange. The QI will hold the proceeds from the sale of the relinquished property and then use those funds to acquire the replacement property.
    3. Like-Kind Property: Ensure that the replacement property qualifies as like-kind to the relinquished property. Generally, this means that both properties must be held for investment or business purposes, and they must be of like-kind. For real estate, this is relatively broad, encompassing most types of real property.
    4. Equal or Greater Value: To defer all capital gains taxes, you must reinvest all the net proceeds from the sale of their relinquished property into one or more replacement properties of equal or greater value and incur equal or greater debt on the replacement property. There could be tax consequences if you do not use all the gains. Talk with your tax accountant or the 1031 exchange specialist before you enter a 1031 exchange.
    5. Tax Implications: While the 1031 exchange allows for the deferral of capital gains taxes, it's essential to note that the tax liability is merely deferred, not eliminated. When you eventually sell the replacement property without executing another 1031 exchange, you could owe capital gains taxes on the accumulated gains from both the original and subsequent properties.
    6. Consultation: We always encourage your clients to consult with tax professionals and legal advisors familiar with 1031 exchanges to ensure they understand the implications fully and structure the exchange appropriately.

1031 exchanges is a powerful tool that allows sellers to defer capital gains taxes. Working with Silverstone Commercial as your agents will help navigate the complexities of the 1031 exchange process and identify suitable replacement properties. Working with an agent will play a crucial role in facilitating your investment strategies and financial goals. It's essential to stay updated on current real estate market trends, property values, and regulatory changes that may impact the 1031 exchange landscape.

Whether you're selling or buying real estate, it's important to understand the nuances involved, work with professionals when necessary, and ensure transparency throughout the transaction process.

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Silverstone Commercial(BRE# 02085393)
1088 Branham Lane, San Jose, CA. 95136
(408) 781-4954
info@silverstonecommercial.com
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