Replacement Property Identification

An identification shortlist is a working document, not a wish list. It has to name real candidates, in writing, with enough precision that a qualified intermediary and a title company can act on it without asking what the investor actually meant. A shortlist built to satisfy a form is not the same as one built to close a purchase.

Writing a Description That Actually Holds Up

An identification notice needs an unambiguous legal description or property address, not a neighborhood reference or a broker's marketing name for the building. A notice that says a Corktown mixed-use property without a street address invites exactly the kind of dispute an exchanger cannot afford forty days into a forty-five day window.

Each candidate description should also carry the purchase price range and financing assumption behind it, so the file shows both what the investor is considering and what they can actually close on given current loan terms.

A vague description costs more than a redo of the notice language; it can push a candidate's title work and lender review back by days the exchanger does not have left inside the 45-day window.

Searching the Corridors That Actually Fit the Budget

A Detroit-area search usually spans several distinct submarkets at once: downtown and Midtown for urban multifamily or mixed-use income, Corktown and New Center for smaller adaptive-reuse buildings, Rivertown for waterfront-adjacent product, and the I-75 and I-94 industrial corridors for warehouse and light-manufacturing replacement assets. Running all four searches in parallel from day one, rather than starting downtown and only later widening to industrial, is what keeps the shortlist populated by day 30 instead of day 40.

A search that starts narrow and widens only after early candidates fall through routinely runs out of runway before day 45, since broker relationships and title work in a new corridor take days to spin up that a parallel search would have already spent productively.

Ranking Primary Candidates Against Backups

A shortlist of three candidates should rank them, not merely list them. The primary candidate should be the one furthest along in financing, title, and seller cooperation, while the backup candidates exist specifically to cover a financing decline, a title defect, or a seller who walks away from the deal after identification. That ranking should be revisited weekly as each candidate's status changes.

• Primary candidate: financing term sheet in hand, title commitment ordered
• Backup one: comparable asset class, seller cooperative, financing not yet started
• Backup two: different asset class or corridor, held as a true fallback
• Deadline tracker for each candidate's financing and title status
• Seller contact confirmed as willing to proceed on the identified timeline

Keeping Deal Teams Aligned Before the Notice Goes Out

A shortlist works only if every team on it understands their real position, not an imagined exclusive deal. The broker, lender, and title company for each candidate should know they are one of several names on a shortlist, not the only option, because that framing changes how quickly they move on term sheets and title work. A candidate's team that understands the competitive shortlist structure tends to return documents faster than one that assumes an exclusive deal.

Locking the File Before Day 45

The final identification notice should go to the qualified intermediary with enough lead time to fix a typo in an address or a legal description, not on the afternoon of day 45. A dated internal deadline several days ahead of the statutory one gives the file room to catch an error before it becomes irreversible.

A second read of the final notice by someone other than the person who drafted it catches the kind of small errors, a transposed suite number or an outdated purchase price range, that are easy to miss after several rounds of revision under deadline pressure.

Common 1031 Exchange Questions

What has to be in an identification notice for it to count?

The notice needs an unambiguous property address or legal description delivered in writing to the qualified intermediary before midnight on day 45. A verbal mention to a broker or an internal note does not satisfy the requirement.

How many Detroit submarkets should a START EXCHANGE REVIEW cover at once?

Most exchangers benefit from searching two or three submarkets in parallel, such as an urban corridor and an industrial corridor, rather than exhausting one search area before starting another, since that parallel approach fills the shortlist faster.

What makes a backup candidate different from a primary candidate?

The primary candidate should be furthest along on financing and title work, while backups exist to cover a financing decline or a seller who withdraws. A backup does not need the same level of completed diligence, but it does need a cooperative seller and a realistic closing timeline.

How early should the identification notice be finalized before day 45?

Building in several days of buffer before the statutory deadline gives time to correct an address or legal description error, which is preferable to finalizing the notice on the last possible day with no room to fix a mistake.

Does the identification process replace the three-property rule or the 200 percent rule?

No, those are the specific counting rules that govern how many candidates and what combined value can be identified; this work is the practical process of building the shortlist itself within whichever rule the exchanger and their advisor choose to use.

Ready to organize the exchange file?