As with any asset in a retirement plan, there are numerous reasons to sell or trade. What’s true with stocks and bonds also holds true with alternative assets, such as real estate. Perhaps the asset is underperforming and you would like to exchange one property for another. Maybe you are getting closer to retirement and want to turn your property into cash.
The National Association of Realtors reported in October, 2014, home sales reached their highest annual pace. In September, 2014, 5.17 million homes were sold in the United States; up from 5.05 million in August. This means there are more available buyers in the market right now for single-family homes and condominiums, which are two popular real estate investments in a self-directed IRA.
Whatever the case for selling your property, there are four steps to follow. The main difference between this and a typical property transaction is that The Entrust Group will sign all of the documents on your behalf.
1. Place the property on the market with the assistance of a realtor or real estate agent.
2. When you locate a buyer and begin corresponding, make sure that all documents list the seller as your IRA or Individual 401(k).
3. Complete a “Sell Direction Letter,” along with required transaction documents (see step four) provided by your real estate agent and other involved parties, and submit them to Entrust. The letter gives Entrust direction to liquidate the real estate asset.
- Refer to the recorded deed for proper titling of the documents. On each document, write that you have “read and approved” it, add the date and sign your name. Do not sign the documents where a signature is required. Entrust must sign for the sale on your behalf.
- In addition to the Sell Direction Letter, required documents include: Purchase contract, warranty or grand deed, preliminary title report, estimated closing statement (if applicable).
4. The property sale is consummated between the Real Estate IRA and the buyer. The buyer will draw up a purchase contract, which Entrust will sign on behalf of your retirement plan.
- All money you receive from the sale of the property will be deposited in your IRA or Individual 401(k). Make your sale proceeds check or wire payable to “The Entrust Group, Inc. FBO [Client or Plan Name], Account # [Entrust Account number].”
Entrust will never sell a property without your permission. You make the decisions, and we administer your assets and transactions.
To help you better understand the process of selling a real estate asset, we have designed this step-by-step infographic. You can reference this and keep nearby when you are in the selling process to ensure you don’t miss anything important.