Is 1031 exchange a disadvantage?

[Dan L.]

Hi there!An investor with experience in multiple properties advised me against using 1031 exchange because he stated that if the real estate agent knew that the buyer was using 1031 then real estate agent could use the time limitation against the buyer and not give the buyer a good deal.
The buyer is forced to buy at a higher proce because he has time working against him in a 1031 exchange. My question is this. Is this a valid point, and if so how does one use a 1031? Should one just avoid using 1031 and instead use equity of the property to move up to buy larger properties?

Thank you for your thoughts and wisdom. 

[Dave Foster]

@Dan L., That can certainly happen and I've seen it a couple of times.  It's more common when you've got a 1031 in process than it is when you're selling.  And even then it's awfully rare that someone takes advantage.  What's more common is that the other side doesn't understand the 1031 and worries you'll cause them issues.

But there's plenty of ways to solve that.  The 1031 does have to be disclosed to everyone in the transaction.  But @Nathan Gesner you're right there is no specific form or time for when it has to be disclosed.  

So if you want to keep your 1031 confidential simply make the contract an assignable contract.  Many realtor boards have a standard contract that already allows assignability so you don't even have to do anything.  An assignable contract allows us to do everything we need to meet 1031 requirements.  And then we always provide notifications at the closing table that meet the IRS rules.  By doing it then your 1031 is compliant.   But it's too late for the other party to take advantage.