About a year and a half ago, Tom Runge and his wife, Cathy Woods, put their Auburn, Wash., home up for sale. Woods had taken a new telecommuting-friendly position and the couple planned to move to Portland, Maine, where they could more easily afford some investment property.
The situation seemed ideal, but there was just one problem: Their four-bedroom Washington house didn't sell.
That was no surprise in this tough market. According to the National Association of Realtors, the rate of existing home sales in June 2008 was 15.5 percent lower than it was in June 2007, while median existing-home prices fell by about 6 percent compared to the previous June.
So in an effort to facilitate their cross-country relocation, Runge made an unusual move. He began contacting people through the "housing swap" section of Craigslist.org to try to broker a permanent home trade with someone who wanted to move to the West Coast.
The idea behind swapping is to find someone who lives in the area where you want to move who wants to buy a home where you live. You then sell each other your homes simultaneously.
So far, Runge says, he hasn't had any takers -- and he's not that optimistic that he will. But he has become one of the thousands of home sellers who are trying to unload their houses by way of swapping.
This new type of real-estate transaction has become another option for people who are struggling to sell their home in a market that has slowed to a virtual standstill."It's just another alternative to find a buyer," says David Moskowitz, owner of the online house-trading site DomuSwap.com. "It's another advertising venue."Recent months have seen the proliferation of sites like DomuSwap, such as OnlineHouseTrading.com, GoSwap.org and TrySwappingIt.com. Most sites offer their services for free, but some charge one-time listing fees. Others offer listing "upgrades," like premium placement on the site, for a fee.Even if you don't pay to jazz up your ad, the appeal of advertising your home to thousands of trade-friendly homeowners is obvious. DomuSwap has almost 9,500 members, who have exchanged 33,000 messages among themselves."Once people post, they are talking, usually via e-mail, to a good number of other parties," Moskowitz says.It's not just homeowners getting in on the trading action. A brief search on several sites revealed listings from Realtors and even builders trying to move the last few unsold homes in a subdivision."Developers are now looking at trade-ins the way a new car dealer looks at trade-ins," Moskowitz says. "They might want to refurbish (the home they trade for), or knock it down and use it for the land."
Which raises the question: How is it possible to trade a small 1960s rancher for a brand-new, modern-day minimansion? When two swappers find each other, the person with the less-expensive home will usually even out the trade by forking over some cash, either from a lender or from their own bank account."It's relatively rare that you have two properties with exactly the same value," says Matt Battiata, owner of Battiata Real Estate Group in San Diego.Then there's the matter of the actual sale. A home swap is essentially two closings that occur simultaneously. Swappers will want to make sure that their closing is contingent on the closing of the other property, Battiata says, so one party can't back out and leave the other on the hook for two homes.Before contracting to trade homes, swappers should perform the same due diligence that they would if they were buying a home the traditional way. Home inspections and full disclosures of any structural deficiencies ensure that both parties know exactly what they're getting. Next: "A swap deal doesn't automatically release homeowners... ><Bankrate.com is the Web's leading aggregator of information on financial products including mortgages, credit cards, new and used automobile loans, money market accounts, certificates of deposit, checking and ATM fees, home equity loans and online banking fees. Visit Bankrate.com to get the tools and information that can help you make the best financial decisions.
