How often does it happen to you? You market properties in every way imaginable. You find a prospect. You learn about their needs, wants, desires, budget, and so much more. You show many properties until finally, the clients pick one. They make an offer…the offer is refused. A counter offer is tendered…it’s refused. Back and forth until, perhaps, there is agreement. Papers are signed, deposit in hand, financials in place, application is in to a lender…DECLINED. You just spent days, weeks, maybe longer with a client who can’t follow through. The sale is lost! Are you tired of that? Stupid question, I know.
Here’s another typical scenario. When trying to list a property the client says, “I’m afraid of the capital gains taxes I’ll have to pay. I just don’t know if I want to sell.” They contacted YOU, yet now as you try to get their signature on the listing agreement they balk. Fear of capital gains or other taxes have them frozen. What do you do?
Well, you could pressure them into listing and face the fallout later. You could mention a 1031 exchange, but if their goal is to “downsize” or simply liquidate, that might now work either. Actually, even if a 1031 is viable, how many have you been part of that fell apart? Then what? Who does the client blame?
There is a solution. It’s called a Deferred Sales Trust (DST). This trust defers capital gains indefinitely at the discretion of the grantor (owner). You, as the real estate professional, can recommend your client place the proceeds of any sale into a Deferred Sales Trust. Now, they can take their time in deciding what to do with the proceeds. Take income. Invest in other real estate. Invest in stocks, gold, savings bonds, or whatever they choose. Regardless of what they do, all capital gains are deferred at the direction of the owner and they remain in complete control.
Remember those failed 1031s…wouldn’t this be a better solution? The Deferred Sales Trust can be integrated into the 1031 Exchange Agreement prior to closing on the client’s property sale. This integrated structure allows the client to receive the 1031 exchange proceeds in the form of a Deferred Sales Trust instead of a taxable cash distribution in the event the 1031 exchange fails. The Deferred Sales Trust then gives the client opportunity to defer payment of capital gains taxes over a period of time of their choosing.
As the real estate professional, you have now created a true WIN-WIN situation for the client. What’s in it for you? Never miss another listing opportunity because of the above mentioned scenarios…or any other for that matter. Never lose another sale because the 1031 exchange fell through. Never find yourself in a situation where you, as the real estate pro, don’t have a solution.
The Deferred Sales Trust is another tool in your kit to get listings, sell more property and make more money. Diversify your income today by taking advantage of this simple, yet powerful sales tool. List more real estate. Sell more real estate. Earn more income than ever before. All the while you are treating your client with the respect they deserve by sharing this opportunity to meet their needs.
As in all situations regarding the sale and disposition of property, always seek the counsel of an attorney or qualified tax professional before entering into any agreement.
For more information about the Deferred Sales Trust, or to learn how you can become a DST partner, contact us at: