real estate

Consider home swap in tough market

And as with any traditional purchase, the buyer in a house swap can get a mortgage to pay for the new house. Anyone needing a mortgage in a home swap should include a copy of the sales contract with the application documents to show the new lender there will be only one mortgage once the deal closes.


There are many advantages to trading versus selling, says Bob Boole, who wants to trade his town house in Treasure Island, Fla., for a home in North Carolina.

"For one, I don't have to deal with a bunch of people walking through the house giving me silly offers," says Boole.

If no real estate agent is involved in the trade, the buyer and sellers save on real estate commissions.

It's also easier to coordinate the moving process when you do a trade because the moves can occur simultaneously. Both seller and buyer can save the trouble of putting furniture into storage as opposed to a seller in a traditional deal, who has to rush to find a home to buy after the closing.


Doing a home swap isn't for everyone. As with a standard home sale, if you owe more on your mortgage than your house is worth, the only way a home swap would work is if you pay the lender the difference of whatever you sell the house for and what is owed on the mortgage. It also could work if the lender accepts a short sale.

Homeowners who are in a rush to move or who are not flexible regarding the location or features they want in the new house, may have limited options. Not every house on the market belongs to a seller who is open to trading.

Boole says he was surprised that despite being "picky" about the type of house and location he wanted, he received five responses days after he listed his place for trade. And based on the prices of the houses he liked, he would likely get some additional cash out of the potential deal.

Fair trade

While traders sometimes agree to swap homes of similar values and call it even, there is often additional money or assets such as cars and boats included in the closing, says Naumov.

"The trade has to be even," says Bruce Knapp, who has traded a couple of properties including a condo in Pensacola, Fla., plus some cash and a car, for a lot in Georgia.

That's why it's important for both parties to order fresh appraisals for the homes being traded.

Ready to trade your home?

If you decide to go for a home swap, the more moving parts you have in the deal, the more you should consider hiring a lawyer to help draft the contract, Castellanos says. Many traders use a standard contract and simply add a clause that the deals must close simultaneously.

"But as much as you would like to save a few dollars, it's not worth the potential downsides" of not hiring a lawyer, he says. "(Traders) should protect their rights as any other buyer would."


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