- Real estate trading
Real estate trading (also referred to as permanent Real estate swapping), is a type of "I buy yours you buy mine" arrangement. This is distinct from vacation home swapping.
The deteriorating real estate market (circa 2006+) has led many to realize that trading may be an extremely viable approach to selling one's real estate. This approach only works if the seller is also looking to buy another property, such as a move or relocation. However, it is possible to move up or down in price, size, etc, or even trade to another city or state entirely.
While related, real estate trading is different than 1031 Exchanges. 1031 exchanges are a way to defer capital gains tax on investment properties. 1031 exchanges do need to involve an actual trade of real estate between two parties.
Online Real Estate Trading
Online trading can take two forms.
The first is simply the inclusion of a text box alongside a real estate listing, stating the seller will consider a trade and possibility a description of what the seller is looking to trade for. Craigslist is a popular example of this. While not specifically geared towards permanent trades, it is often used for such a purpose. There are also several web sites, mostly set up by Realtors, that make use of this approach.
The second, more sophisticated approach, uses a model similar to a dating service. Such a web site matches sellers with other sellers based on what each seller has and what each is looking to trade for. There are a small number of web site that make use of this approach.
How it works
While there are multiple ways to accomplish a house trade, the simplest is the simultaneous sale approach. In this scenario, you purchase a property from another seller, and he buys your property, all in the same transaction. As in a separate sale, you must have sufficient funds coming in from the sale to pay off your existing mortgage. You also need the necessary funds to purchase the new property, or the necessary down payment to procure a new mortgage.
Since both parties are buying new properties, both will need the ability to purchase the other property, either through sufficient equity in their existing house and /or additional available cash or borrowing potential. It is therefore difficult to accomplish a trade with another owner who has little or even negative equity.
In simultaneous sale approach, as the name implies, the two transactions must happen simultaneously. In other words, both close or neither closes. By structuring the closing in such a way, proceeds from the sale of one property can be figured into the amount applied towards the purchase of the other. In this way, you are able to apply a portion of your existing equity towards the new property.
Can it work for me
A simple test to determine if you are a candidate for a house swap is the following:"If you sold your property today, would you be able to go out and purchase that other property tomorrow? If the answer is no, you either need to look at a less expensive property to swap with, or you're not a candidate" [http://www.myrtlebeachonline.com/business/story/462454.html] [http://www.domuswap.com/swaptalk/viewtopic.php?f=4&t=125#p312] .Since this type of
house swapping is in actuality a simultaneous buy and sell, you will need to walk away from the sale part with enough funds to complete the buy portion. The stumpling block here is often the necessary down payment (20% is standard). You therefore need to have at least 20% equity, minus closing costs, to purchase the other property.News Articles
* [http://www.cbsnews.com/sections/i_video/main500251.shtml?id=3812528n Can't Sell Your House? Swap It! (CBS News)]
* [http://www.newschannel5.com/Global/story.asp?S=6907305 Swapping Homes To Overcome Real Estate Market (WTVF - Nashville)]
* [http://www.azcentral.com/community/chandler/articles/1023cr-houseswap1024.html?&wired Chandler part of last-ditch sales effort: house swap (azcentral.com)]
* [http://www.thestreet.com/_email/markets/marketfeatures/10393124.html Your Home Not Selling? Swap It (thestreet.com)]
* [http://www.realestatejournal.com/buysell/tactics/20070827-kim2.html Neighbors Swap Houses Instead Of Testing the Housing Market (RealEstateJournal.com)]
* [http://www.realestatejournal.com/buysell/tactics/20080201-levitz.html I'll Buy Your House If You Buy Mine (Wall Street Journal)]
* [http://www.mysanantonio.com/business/realestate/stories/MYSA030208.01D.homeawap.c1d129c.html Trading Spaces (MySanAntonio.com)]
* [http://wbztv.com/consumer/house.swapping.house.2.686325.html WBZTV Boston: Key To Selling House May Be "Swapping It"]
* [http://www.chicagotribune.com/business/chi-swap_nh_208feb08,0,6147708.story Chicago Tribune: Slow market prompts some people to try house swapping]
* [http://www.fox16.com/news/local/story.aspx?content_id=305188a7-9ea5-4818-a78d-d354f1da664b Fox16 Little Rock: Can't Sell your Home? Why Not Swap?]
* [http://money.cnn.com/2008/04/24/real_estate/extreme_home_sales.moneymag/ Money Magazine: Home for sale by any means]
* [http://www.kgw.com/news-local/stories/kgw_050108_sweeps_house_swap_.bc094ef5.html KGW Portland: Swapping homes could be a house sale solution]
* [http://blog.cleveland.com/business/2008/05/kelly_masarik_looks_at_real.html Cleveland.com: Homeowners fight real estate slump with online house-swapping]
* [http://www.torontosun.com/NewHomesandCondos/2008/05/09/5517966-sun.html Toronto Sun: Can't sell your house? Trade it]
* [http://www.wtkr.com/Global/story.asp?S=8290184&nav=menu78_4_1 WTKR Virginia: Don't Waste Your Money: House Swapping]
* [http://www.myrtlebeachonline.com/business/story/462454.html Myrle Beach Sun News: Trading spaces: Yours for mine?]
* [http://www.middletownjournal.com/hp/content/oh/story/news/local/2008/06/01/mj060108swapinside.html Middletown Journal(OH): Trading houses? 'Be very careful']
* [http://www.journal-news.com/hp/content/oh/story/news/local/2008/06/01/HJN060208swap.html Hamilton Journal-News (OH): Sellers Get Creative]
* [http://www.abc2news.com/news/local/story.aspx?content_id=ba7721da-6e93-46e5-b13f-ce82b34a182c ABC2 Baltimore: Home Sweet Swap]
* [http://www.smartmoney.com/deal-of-the-day/index.cfm?story=20080603-home-swapping-web-sites SmartMoney.com: Home-Swapping Sites No Easy Fix for Desperate Sellers]TV News Coverage
* [http://www.youtube.com/watch?v=jBQZU7HQ938 CBS News - The Early Show - Story on Home Swapping]
* [http://abcnews.go.com/GMA/story?id=4322684&page=1 Good Morning America - House Swapping Is a Growing Trend in Tough Real Estate Market]
* [http://video.yahoo.com/watch/2095871/6595649 Fox Business Network: House Swapping]
* [http://cbs2.com/video/?id=58678@kcbs.dayport.com CBS2 LA: Can't Sell Your Home? How About Swapping It?]
* [http://www.local10.com/news/15483731/detail.html WPLG Miami: House Swapping Way Around Slumping Market]
* [http://www.katu.com/news/16693706.html KATU Portland: Creative ways to sell - or trade - your home]
* [http://www.nbc-2.com/articles/readarticle.asp?articleid=18237&z=3 NBC2 Fort Myers: Can't sell your home? Trade it]
* [http://www.baynews9.com/content/36/2008/3/25/335019.html Bay News 9 Tampa: Homeowners turning to house swapping]
* [http://wcbstv.com/seenon/home.sales.pad.2.679026.html WCBS New York: Home Sales Blues: Residence Swapping]
* [http://www.wxyz.com/content/news/dwym/story.aspx?content_id=4187befa-3ffc-482e-a358-f5681d0f95b7 WXYZ Detroit: Home Swap]
* [http://www.msnbc.msn.com/id/21134540/vp/23900563#23900563 NBC Today Show: Homeowners start swapping]
* [http://www.keyetv.com/content/news/topnews/story.aspx?content_id=77bac143-8cf0-4d4c-a525-519c4641759d CBS42 Austin: Can’t sell your home? Why not swap?]
* [http://www.king5.com/business/stories/NW_042508BUK_trading_houses_seattle_KS.9c051024.html King5 Seattle: Trading homes catches on amid stale market]
* [http://www.9news.com/news/article.aspx?storyid=90963 9NEWS Denver: Desperate house sellers start swapping]
* [http://www.koin.com/content/mediacenter/default.aspx?videoId=7372@koin.dayport.com&navCatId=156 KOIN6 Portland: House Swapping]
* [http://www.theindychannel.com/news/16274670/detail.html RTV6 Indianapolis: House-Swap Attractive To Those Struggling To Sell]
* [http://www.wcnc.com/news/local/stories/wcnc-051608-krg-houseswap.109de6288.html WCNC Charlotte: Trouble selling your house? Try swapping]
* [http://www.abc4.com/news/local/story.aspx?content_id=3867a275-1d79-40fb-b683-8b2e7516cc1c ABC4 Utah: Housing and mortgage crisis forces sellers to get creative]
* [http://abcnews.go.com/Video/playerIndex?id=4951156 ABC News: Struggling to Sell? Swap It!]
* [http://www.cnbc.com/id/15840232?video=756567239 CNBC: House Swapping]Coverage on Radio
* [http://thestory.org/archive/the_story_499_Permanant_House_Swap.mp3 The Story (North Carolina Public Radio): Permanent House Swap]
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