The core rule of a 1031 exchange is that you can never touch the sale proceeds. Someone has to hold them — and it can't be you, your agent, your attorney (if they've worked for you recently), your employee, or a relative. That someone is the qualified intermediary (QI), also called an exchange accommodator or facilitator.
What they actually do
- Prepare the exchange agreement you sign before your sale closes, plus assignment paperwork for both contracts.
- Receive and hold your sale proceeds in escrow between closings.
- Receive your written 45-day identification.
- Wire the funds to your replacement purchase closing.
- Provide the paperwork trail your tax preparer needs for Form 8824.
What they don't do: find you properties, give tax advice, or fix an exchange that was set up wrong. And critically, they must be hired before your sale closes — a QI hired afterward can't help you.
What they cost
A standard delayed exchange typically runs $750–$1,500 in QI fees, sometimes with a small per-property add-on if you buy multiple replacements. Reverse and improvement exchanges cost several thousand more because the QI's affiliate has to hold title to property. Some QIs also keep part of the interest earned on your held funds — worth asking about when funds are large.
Choosing one safely
Here's the uncomfortable part: QIs hold large sums and are lightly regulated in most states. Ask any candidate:
- Are funds held in a segregated account in your name (not commingled with company funds)?
- Do withdrawals require your signature as well as theirs (dual authorization)?
- What fidelity bond and errors & omissions insurance do they carry?
- How long have they operated, and are they members of the industry association (FEA)?
The large national QIs affiliated with title insurance companies are the conservative default. A rock-bottom fee from an unknown firm is not where you save money on a six-figure wire.
See where the QI fits in the process →The full timeline shows exactly when to hire and what happens at each step