Investors who sell a rental in Sedona or the Verde Valley often search for a “1031 exchange accommodator” and expect to find a realtor who handles the whole thing. It does not work that way. A 1031 exchange has two separate jobs: someone who holds your sale proceeds and paperwork, and someone who finds and negotiates the replacement property. The law keeps those jobs apart on purpose, and understanding the split before you list saves exchanges that would otherwise fail.
I am a licensed broker, not a qualified intermediary, and I never hold exchange money. Here is what each person does, why the rule exists, and how to line them up before your sale closes.
What a qualified intermediary does
The person people call an accommodator is a “qualified intermediary” under Treasury Regulation 1.1031(k)-1(g)(4). That person signs a written exchange agreement with you, takes over your sale contract, receives the proceeds when your property closes, and uses that money to buy your replacement property. You never touch the cash.
That last point is the whole reason the role exists. If you have the right to receive or control the sale proceeds, even for a day, the IRS treats you as having been paid and the exchange fails. The intermediary sits between you and the money so you do not have that right. Under Section 1031(a)(3), the clock is strict: you have 45 days after the sale closes to identify replacement property in writing, and your replacement purchase must close within 180 days (or by your return due date, if that comes first).
Why your realtor cannot be your intermediary
Treasury Regulation 1.1031(k)-1(k) says the intermediary cannot be your agent, and it names real estate agents and brokers (along with your attorney, accountant, investment banker, and employees) if they acted for you at any point in the two years before the sale. The regulation carves out services connected to 1031 exchanges themselves and routine escrow or title work, but if your realtor has represented you in any other deal in that window, that realtor is a disqualified person.
In practice that means a good exchange team has at least three separate people. Your intermediary holds the funds. Your CPA or tax attorney tells you whether the exchange works for your tax situation. Your realtor, in my case, runs the property side.
Who does what
| Role | What they do | What they do not do |
|---|---|---|
| Qualified intermediary | Signs the exchange agreement, holds your proceeds, receives your written identification, wires funds at the replacement closing | Give tax advice, find properties, represent you in the purchase |
| Realtor (me) | Sells your property, builds the 45 and 180 day calendar, finds and tours replacement candidates, writes the exchange cooperation language into contracts, coordinates with your intermediary and title company | Hold your funds, act as your intermediary, give tax advice |
| CPA or tax attorney | Confirms the exchange fits your situation, explains boot, basis, and depreciation recapture, tells you which return date controls your deadline | Find properties or hold funds |
| Title or escrow company | Closes the sale and the purchase, sends the sale proceeds to the intermediary | Hold exchange funds unless it is also acting as the intermediary, which should be disclosed |
A worked timeline
Say your Sedona rental sale closes on Tuesday, March 2, 2027.
- Before March 2: your intermediary and CPA are engaged, the exchange agreement is signed, and your sale contract references the exchange.
- Friday, April 16, 2027 (day 45): your replacement property identification must be in writing and delivered to your intermediary.
- Sunday, August 29, 2027 (day 180): your replacement purchase must close. The periods are counted in calendar days, so a Sunday deadline means you plan to close by Friday, August 27. I would not count on a weekend or holiday extension.
My earlier article on late-year 1031 timing shows what happens when the 180 days collides with your tax return due date.
Questions to ask before you hire an intermediary
A qualified intermediary is not licensed by the IRS, so the quality of the firm is on you to check. These are the questions I would ask, and I would ask them before the sale goes under contract:
- Are exchange funds held in a segregated account in my name, or pooled with the firm’s operating money?
- Does moving the money require two signatures?
- What bonding, fidelity, or errors and omissions coverage does the firm carry?
- How long has the firm done exchanges, and how many a year?
- What is the fee, in writing, including any extra charges for reverse exchanges or multiple properties?
- Can I see the exchange agreement before I sign?
Your CPA or attorney will usually have a firm they trust. I am glad to go over the answers with you.
Where exchanges go wrong
- The sale closes before the intermediary is hired. If the proceeds reach your account, the exchange is over. Engage the intermediary before you accept an offer.
- The 45 day list is too short. You cannot add properties after day 45. The three property rule lets you list up to three regardless of price, so write down backups.
- The wrong person fills the role. Your attorney, accountant, or agent from the past two years is a disqualified person. Ask first.
What to do next
If you own an investment property in Sedona, Cottonwood, or the Village of Oak Creek and might sell this year, talk to your CPA and an intermediary first, then call me. I will build the calendar, scope the replacement search, and tell you what the market looks like in the Verde Valley. My Sedona 1031 exchange page explains how a local realtor fits into your replacement property search, and my Cottonwood 1031 guide explains why many investors spread one sale across lower priced rentals there.
This article is general information, not tax or legal advice. Confirm the facts of your situation with your own CPA or attorney before you sell.