You Can Bank On Our Rates

The most local, national and online bank rates!

Your Home Not Selling? Swap It
Can't sell your home? Then trade it.

For those who are stuck with a house that just won't move in the current market, an extreme option is emerging: swapping the property with a seller in same position.

Home swapping, a practice that has appealed to vacationers for decades, is now being pitched as a strategy for unloading a house for good, especially at a time when buyers are hard to find.
A growing number Web sites are cropping up to match sellers who are willing to become swappers instead.

 
 




Web sites, such as DomuSwap.com and GoSwap.org are among several that are quickly cropping up to act as matchmakers between home sellers who may consider a trade instead of waiting out the market.

"I definitely see a need for this service right now," says David Moskowitz, founder of the Sarasota, Fla.-based DomuSwap. "There are people who have to move and they're really stuck in this market."

Moskowitz, a software developer, says he decided to pursue the concept after trying to sell his own home in Nokomis, Fla., and buy another in downtown Sarasota.

"I was wasting my time looking at properties because I couldn't do anything without selling my existing home first," he recalls.

He asked his realtor to propose a swap to other sellers. She suggested the idea to three people, he says, but there weren't any takers. A nationwide database of similarly minded home sellers could have reached a broader audience and yielded a more positive -- and expedient -- result, he says.

"It's like a dating service," he says. "You could try to match up your brother with someone on your own, but he'll find far more possibilities online."

Moskowitz launched DomuSwap earlier this year. The site has attracted about 1,300 listings for permanent swaps. Moskowitz withdrew his own home from the market after a year.

Swapping permanent residences was a common practice in eastern Russia during Communist rule, says Sergei Naumov, president of NowMoves Inc., the St. Augustine, Fla.-based company that owns GoSwap.org.

"It's vital to try this idea in a down real estate market because a potential seller today is also a future buyer," says Naumov. " [Home swapping] would increase market liquidity because we'd finally see some movement," he adds. "Right now sellers aren't selling and buyers aren't buying."

GoSwap.org was launched in late 2006 and now features 91 listings for permanent swaps.

Home swapping is not as simple as homeowners moving into each other's properties. As Naumov explains, a permanent swap is technically an arrangement between two homeowners who are both buying each others' homes and selling their own at a simultaneous closing. The process should begin by obtaining an appraisal that reflects the property's value under current market conditions, says Naumov.

Using the same title company is critical to consummating the transactions together. The homeowners each sign purchase and sale agreements for their respective properties. They will ultimately both sign deeds and other closing documents on the same day. Mortgages for both properties are also paid off then, and new mortgages are initiated.

Homeowners can also agree to swap properties of different values, using cash or mortgage amounts to offset the disparity, all of which changes hands simultaneously at the settlement table, Naumov says.

Neither site owner was aware of a home swapping deal that was ultimately consummated through their services. They both say that's because users would have to notify them of their successes.

"Does an online dating service know whether there are ultimately any marriages?" asks Moskowitz. He says a couple of things are for certain: There is action on the site and many people are presently saddled with a house they need to sell.

Permanent house-swap listings are even appearing in the "housing swap" section of Craigslist , amid numerous listings for temporary vacation-period swaps. But the property owners we spoke with hadn't yet consummated deals.

Randy Mims of Chalfont, Pa., says he's been trying to sell or swap a renovated 5/6 bedroom, 3 1/2-bathroom investment property for 1 1/2 years. Mims says he paid $161,500 for the Quakertown, Pa., home in 2005, which he renovated. He's now asking $404,647, which, he says, just covers the improvements he made, such as a Jacuzzi and steam room, granite countertops and hardwood floors.

Mortgage Rates in Selected Cities
City Term Rate
Boston 30-year fixed 5.95%
New York 30-year fixed 6.03%
Miami 30-year fixed 6.28%
Chicago 30-year fixed 6.05%
Minneapolis 30-year fixed 6%
Source: manybanking.com
--no origination fee / 20% down payment / excludes Internet banks / excludes credit unions / loans under $417,000

"The market is so bad right now," he says. "Swapping is just another outlet for trying to get rid of it." There's no mortgage on the property, Mims says, but he no longer wants to carry electric and property tax expenses. Mims listed the property on several swapping sites, in addition to Craigslist, and is also marketing the home via a Web site, phonesalesusa.com.

Darrel Wrobel of Delray Beach, Fla., says he doesn't have to sell the three-bedroom, two-bath condominium where he presently resides. But he wants to relocate to Colorado. He hasn't had any bites on the property, however.

"You're either faced with holding on, selling at rock bottom, or finding [another seller] in a place where you'd like to relocate," Wrobel says. His Craigslist ad elicited numerous responses, including a few from homeowners in states where he doesn't want to live, he says.

Contending with the discrepancies in real estate values is also challenging, he says. One Colorado homeowner offered a house of significantly more value, suggesting that Wrobel make up the difference in cash, but the option wasn't a good deal for him.

He's presently speaking with a couple that's interested in trading two Colorado condominiums for his Florida home -- a possibility he's considering, even though it means obtaining mortgages on two separate properties.

Real-estate professionals aren't convinced that permanent home swapping has a viable future. Walter Molony, a spokesman for the National Association of Realtors, says he doesn't know of any permanent swaps that have occurred.

"It might be useful in markets with an extreme oversupply of homes [such as Las Vegas and Miami] ," he says. "But otherwise the number of transactions is statistically insignificant."

Chicago-area real estate agent Honore Frumentino of Koenig & Strey GMAC Real Estate says there are too many variables for permanent home swapping to be successful as a long-term trend.

"It's a lot more complicated than it sounds. The likelihood of finding a match between two people -- not only geographically but monetarily -- is like looking for a needle in a haystack," she says.

"It's hard to find a buyer right now for anything."

green arrowFinancial Resources