1033 Exchange (not 1031) Assistance (Threat of Condemnation, Eminent Domain)

[Steve Sorensen]

I own a property in the western suburbs and the City intends to buy it under "Threat of Condemnation", which falls under Eminent Domain, and level the whole block for new City buildings. This will allow me to use a 1033 exchange which has more favorable terms than a 1031 so I'm looking for anyone with experience with 1033's that might be able to help me out (lawyer? RE agent? 1031 exchange specialist with 1033 experience?). I've done quite a bit of research on the 1033 regulations so I don't need a 1033 lesson here, I'm trying to find someone who has actually been through the process to speak from experience so I know what things to look out for.

My biggest concern is the appraisal and sale price - I fully expect the City to come in with a lower offer than I think it's worth and I expect to have to appeal so I'd like to know what that process might look like. Beyond that, I'm sure there are things I'm not thinking of that you'd only get from going through the process so I'd love to have a conversation.

Thanks in advance!

[Ricardo R.]

Hey Steve,

We’ve had an owner client go through a 1033 exchange after a city redevelopment project forced a sale. Here’s what helped them the most:

1. Get an Eminent Domain Attorney First

• A local eminent domain attorney is worth their weight in gold—especially on the appraisal and appeal side.

• They can coordinate the independent appraisal, negotiate with the city, and handle the legal steps if you dispute the offer.

2. Use a 1031 Exchange Specialist Familiar with 1033

• Even though the rules differ, most reputable 1031 exchange companies also handle 1033 exchanges.

• Ask them specifically about extended timelines for 1033 (you get more time than a 1031) and any special reporting requirements they’ve seen trip people up.

3. Practical Tips We Learned

• Expect the city’s first offer to be below market value—that’s normal.

• Independent appraisals + attorneys with eminent domain experience often secure significantly higher payouts.

• Start lining up the replacement property plan early so you don’t lose time once funds hit escrow.

Bottom line:
Your key players are:

• Eminent domain attorney (negotiations & appeals)

• 1033-savvy exchange specialist (tax side)

• Optional: Commercial broker if you want to roll into bigger assets

Those three together made the process smoother for our client and avoided nasty surprises.