Fees for Basic Simultaneous or Deferred Exchanges (Only $750 for most exchanges)
PRE’s fee for basic exchanges that are simultaneous or deferred exchanges of one relinquished property is only $750. The fee is earned when we set up the exchange of the relinquished property since that is when the bulk of our work is done. There is no additional fee over $750 if only one replacement property is involved in the exchange. If more than one replacement property is involved, the added fee is only $250 per additional replacement property. For example, if one property is exchanged for two new properties, the fee is $1,000 ($750 plus $250 for an additional new property). Other small costs include the cost of wire transferring funds charged by financial institutions (e.g., $30 per wire), and Federal Express and other delivery costs, notary fees, and California tax withholding fees (if applicable). Some escrow or other closing agents may charge a small additional fee for an “exchange escrow” but these fees are not imposed or received by PRE.
If a special exchange account is set up with a special financial institution, PRE receives an additional fee of $250 for our time involved in setting up the special exchange account. There may be additional fees over $250 if these accounts require significant time and activity on our part until the accounts are closed. These added fees only apply to special exchange accounts requested by a customer. PRE receives an additional fee of $250 for PRE’s handling of a seller carryback note. This fee includes receiving note payments, assigning the note and reconveying a deed of trust when the note is paid off. Most of our simultaneous and deferred exchanges do not involve any additional fees or costs other than those noted above. Thus, the cost of most exchanges is very low.
Fees for Complex Exchanges
There are some exchanges that are very complicated, however. A complex exchange may require meetings, additional documents, consultations with the parties or their advisors, and other consulting services. Any consulting services are priced reasonably at professional rates based on the time involved, the service performed, the size of the transaction and the benefits conferred. Special exchange situations and services are discussed further below and in our exchange agreement.
The IRS has provided a safe harbor for certain “reverse exchange” transactions. The new property is acquired before the old property is sold, and title to the old or new property must be parked with an exchange accommodation titleholder. Reverse exchanges are much more complicated than simultaneous or deferred exchanges and involve many additional documents and parking title to either the old or new property. PRE owns and can form new entities that act as an exchange accommodation titleholder in a reverse exchange.
Fees for a reverse exchange vary depending on the exact structure used, the properties involved and the complexity of the transaction. Simple reverse exchanges involving two properties typically have total fees between $3,500 to $5,000 when all phases of the transaction are complete. More complicated reverse exchanges cost more, including cases where a new entity is formed, build-to-suit improvements are made, or more than two properties are involved. After we have analyzed your Reverse Exchange Information Sheet (see “Forms” to download), we can specify the total fees for your reverse exchange transaction.
PRE may handle special items in connection with some exchanges. For example, PRE may receive a carryback note from a buyer, or PRE may be involved in an exchange of property that is partially rented and partially used as the owner’s residence. PRE and its affiliated companies engage in other special or complex transactions, including reverse exchanges. Any additional services are priced reasonably at fixed amounts or hourly fees