If you have owned your property for a while and are ready to move into something bigger, you might feel discouraged by the lack of options. Some landowners even put their plans on hold rather than face the challenge of upgrading in a low inventory market.
You are not alone. Many would-be sellers find themselves in the same position.
For example, if you have owned your 40, 80, or 120 acres for several years, you likely have substantial equity to roll into an 80, 160, or 240-acre property. The challenge is finding the right replacement. While it is not easy, there are strategies that can help you make the move with confidence.
1. Buy Now, Sell Later
One option is to purchase your replacement property first, then sell your current one and roll your proceeds into the new investment. This is known as a reverse 1031 exchange.
The outcome of a reverse 1031 is the same as a regular 1031 exchange. Both defer capital gains taxes and allow you to roll equity into a new property. The difference is timing.
A traditional 1031 exchange requires you to identify your replacement property within 45 days of selling. In today’s market, with so few properties available, that timeline may force you to compromise. A reverse 1031 exchange gives you the ability to secure your next property before you sell, which makes you more selective.
This route is more complex and can carry additional costs, but it offers flexibility.
Always consult with your tax advisor or a qualified intermediary to determine the right exchange strategy for your situation.
2. Stay in Regular Contact with a Real Estate Agent
Being in close communication with an experienced agent can make all the difference in a low inventory market. Here is why:
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Access to more than what is on the market
Agents are in daily contact with landowners, some of whom would sell under the right circumstances but do not want their property listed publicly. These opportunities are not visible on traditional listing sites. -
Early access to new listings
When properties do hit the market, you need information quickly in order to act. A connected agent ensures you are notified right away so you can be competitive. -
Targeted outreach to specific properties
If there are particular properties you would consider, an agent can approach those landowners directly to explore a possible sale.
Moving Forward
Inventory may be tight, but that does not mean your plans to upgrade need to be put on hold. With the right strategy and the right representation, you can position yourself to make a smart move when the right property becomes available.
If upgrading your property is something you want to explore, give us a call. We will work with you to strategize the best approach for your situation.
