The Housing Chronicles Blog: Can't sell your home? Try swapping it.

Thursday, January 31, 2008

Can't sell your home? Try swapping it.

First there was Wife Swap (the ABC television show type). Then there were websites such as which allowed lesses of cars to get out of long-term car leases they no longer wanted. Now the power of technology is helping homeowners who can't sell their homes swap them for homes in other cities. From a story in the Wall Street Journal:

The concept of trading homes temporarily for vacations has long existed, but now it's being adapted to the slumping real-estate market as people, particularly in the Sunbelt and other slow spots, scout for ways to unshackle themselves from their property. Anecdotal evidence suggests the number of people doing this is still relatively small, but it has popped up from virtually nothing in recent years.

While some form of bartering has been going on since the beginning of time, experts say they aren't aware of house swapping being done in previous down housing markets. The technology and access to it didn't exist several decades ago. The current model is based on new technology that enables computerized matching of a large number of properties and owners' swap criteria...

Experts say it's probably best not to get involved with someone who owes more money on their house than what it is worth -- because they could have a tough time getting financing. And the transaction itself isn't without challenges. recommends that both clients use one title company that knows not to complete the deal "until everyone signs off." Daniel Westbrook, the co-founder of the company says, "the scariest thing that could happen is that you buy someone else's house and they don't buy yours."

Both sides of a swap transaction typically close simultaneously -- taking away the risk of being saddled with two mortgages at once, or of having to borrow more after purchasing a new home because your old house didn't sell for as much as you thought it would. When swap partners meet directly online they also save on brokers' sales commissions -- usually 4% to 7% in most markets. If there are homes of unequal value, one buyer provides the cash or gets a mortgage to make up the difference experts say.

Homebuilders are also benefiting from the same scenario, as they'd rather partner with resale brokers to sell trade-in homes in distant neighborhoods than be saddled with completed inventory in a single subdivision:

Developers in the weak market are getting into the act, trying to unload new homes by offering to buy peoples' older, less expensive ones -- essentially taking trade-ins like car dealers. Developers say that they do have to then worry about selling the trade-in home, but it is more important for them to avoid getting stuck with a new subdivision of empty homes, which is bad for their image and their wallet.

Developer Florida Lifestyle Homes in Daytona Beach says it will buy homes of people who will "trade up" to a new home that has a value at least 20% greater than the one they're in.

1 comment:

AmyFret said...

If you can't sell it, try swapping it, that is Sure like to let everyone I know that this is a great idea and it works, its best when everyone knows they are in control and know they do not have to rely on someone else to get them a lead. So FIRE your Broker and collaborate online with other homeowners who are looking to permanently trade their homes too. Also, this one is free.