Brokerages are buying 1031 exchange service companies for the same reason they buy mortgage, title, insurance, and other transaction-adjacent businesses: control, retention, margin, and future brokerage value. What makes 1031 different is the client type it serves. Investor clients transact again and again. If a brokerage can stay connected through the reinvestment cycle, it does not just win one deal, it wins the next several.
For years, most brokerages have treated the 1031 exchange as a “handoff and follow along” step. The agent is still driving the deal, but the exchange is run by a separate operator with its own timelines, documents, and daily decision points. That shift matters because the exchange window is when the investor is actively underwriting the next deal, talking replacement property, timing, and execution pressure. The professionals closest to that workflow become the ones shaping the next move, and the replacement purchase often follows the path of least friction. If the brokerage is not built into that process, it is easy for the next transaction to migrate elsewhere without any warning. Just circumstance.
From a mergers and acquisitions viewpoint, ownership matters. A referral partner is helpful, but it is not an asset you can valuate. It does not show up in a buyer’s Due Diligence report as a durable asset advantage. By contrast, an acquired and integrated exchange operation becomes part of the brokerage’s infrastructure. It can be measured, improved, and presented as a defensible profit center tied to investor repeat business.
That is why larger brokerages and ambitious regional firms are acquiring exchange providers, exchange-related operations, or the teams and systems that run them. They want to tighten the loop around investor clients and build a brokerage that looks stronger on paper when the company goes to market.
The first driver is retention. Investor clients are high-value, not because they are always easy, but because they repeat. The exchange stage is where repeat business is either secured or lost. If the brokerage disappears during that stage, the investor’s next purchase is more likely to land with whoever is guiding them through the process. Owning the exchange function keeps the brokerage present during the reinvestment window instead of watching it from the outside.
The second driver is economics. Commission income is cyclical. Every buyer in the brokerage M&A space knows that. When markets tighten, transaction counts fall and revenue compresses. Brokerages that can show a broader earnings base, especially one tied to recurring investor activity, present a different risk profile. The point is not that exchange revenue replaces commission revenue but rather improves the quality of the revenue story and reduces how exposed the brokerage appears to market swings.
The third driver is recruiting leverage. Investor-focused agents and teams want a brokerage that can support investor transactions. They care about process discipline because that is a key driver that protects relationships. When a brokerage can say it has an exchange
operation integrated, that is not just a feature. It is a reason for an investor-heavy team to join, and it is a reason for them to stay. In recruiting, that matters because teams that drive investor volume tend to have options.
Buyers are not just buying agent count anymore. They are underwriting durability. They want to know whether repeat business exists, whether the brokerage has an advantage that is hard to replicate, and whether the company has margin improvement potential beyond “hope volume returns.” A brokerage that can document investor continuity, show internal capture of investor services, and demonstrate a repeatable investor pipeline can change how a buyer views risk. This makes a brokerage a strong contender for an acquisition.
A buyer underwrites what can be verified. If the brokerage can show that investor clients commonly stay through the reinvestment cycle and continue transacting within the same ecosystem, that reduces uncertainty. It supports a stronger valuation narrative because the brokerage is not only dependent on new leads and fresh transaction flow. It is benefiting from repeat investor momentum.
Real Estate Mergers and Acquisitions Co. sees this trend from the deal side because 1031 capability is increasingly part of how brokerages position for growth and how buyers evaluate them during a sale. In one example, we advised on a transaction where Company X acquired a 1031 exchange services provider specifically to bring exchange capability under brokerage control and keep investor clients connected to the brand through the reinvestment window.
That example captures why this is happening across the market. Brokerages are buying 1031 exchange services because it helps them hold onto investor clients, capture more of the investor value chain, and present a stronger company when it is time to sell. It is not about adding another line to a list of services. It is about building a brokerage that is easier to underwrite, harder to discount, and more valuable at exit.
About the Author
Mark Lukes is the Founder and CEO of Real Estate Mergers & Acquisitions Co., a firm specializing in mergers and acquisitions for real estate brokerages and related services companies, with a focus on representing sellers and protecting long term value.
