Unfortunately, in these present times, there is continuing tension existing between the real estate industry and also the securities industry with regard to which industry must have control over the selling process involved in transacting TIC interests, and the reason for this tension has a lot to do with the IRS determining that TIC interests should be treated as real estate and not as securities for the purpose of computing taxes. Thus, many people are given to believe that TIC interests could be sold off in the form of real estate and not as securities and thus TIC securities-licensed registered representatives have been shut out of being able to earn commissions on sales of TIC interests.
What's more, in the first years after the TIC interests were being considered as real estate, there were even numbers of real estate sponsors as well as securities sponsors and also TIC securities-licensed registered representatives. All that however has changed in the recent past and in fact, now TIC securities-licensed registered representatives are becoming more active in letting participants in TIC interest offerings learn more about the fact that such interests could be characterized as securities offerings according to securities laws.
Dwindling Real Estate Sector
With this change came redistribution in numbers of TIC securities-licensed registered representatives who now accounted for eighty percent of the TIC industry leaving just a dwindling twenty percent of the real estate sector. Thus, because only TIC securities-licensed registered representatives can earn from selling securities, it has put the real estate brokers out on a limbo.
The fact is that in case TIC sponsors treat their transactions as securities it is then necessary that they adhere to specific standards as laid out by the Securities and Exchange Commission. Thus, whenever securities are sold, the transactions must go through TIC securities-licensed registered representatives and the relationship with such TIC securities-licensed registered representatives is that of an independent contractor with the exception that the TIC securities-licensed registered representatives can only sell products that have been approved by a broker or dealer.
Another factor that requires taking into account is that many times the TIC securities-licensed registered representatives are simply people with a background in securities though not with an awful lot of real estate experience. This means that a person who is not a real estate expert will generally be handling potentially beneficial real estate deals, which in turn means that for the TIC securities-licensed registered representatives to really succeed in their profession, it may be to their advantage to take time and become well acquainted with how to analyze real estate as well as learn about leveraging the business and more.
Author Resource:-
Kathryn R. Landry is a business writer for TIC Advisors, Inc. A company that can give you the most complete information on a 1031 exchange or TIC property ownership.
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