There has never been a better time to trade real estate than now. I have been involved in one capacity or another in the trade of hundreds of properties. Well, actually thousands of properties, every sale is nothing more than trading a property for money. But for this article we will stick to actually trading one property for another. I have traded properties for myself and on behalf of clients. These transactions have ranged from a simple swap of one property for another to very complicated 1031 tax-deferred exchanges involving multiple parties and properties. Additionally, I have financed scores of other transactions involving trades.
A few minutes ago I checked the local MLS and found nearly 10,000 residential properties listed for sale. That is a lot of inventory. When someone lists their home for sale it is a very good sign that they want to move. And yet every single one of them is using passive methods to attract buyers. Listing the property for sale, yard signs, fliers and ads in publications are all passive attempts to get a buyer to step up to the plate. Don’t misunderstand; there is nothing wrong with advertising a property for sale. My point is that all of the traditional methods are saying to the prospective buyer, “Come to me.”
What I am suggesting is a seller could switch sides. Instead of waiting for a buyer, become the buyer! Go out and offer to purchase a property using the equity in your existing home. Will it work every time? Of course not, but on the other hand, that sign in your front yard is looking a tad rusty.
The steps for making a trade are not all that different from actually buying a property outright. Chances are you will need financing, so get pre-approved for a mortgage. Then go out and shop for a home, ask the seller or their agent if they will consider a trade. Very often the reply will be, “Trade for what?”
What do you know? We found a prospect! Now what? Don’t chicken out now, make an offer. I suggest keeping it as simple as possible, “I’ll buy your home if you buy mine.”
It may be easier if you think of it as two separate transactions. In fact, if you treat it like two separate transactions on paper it will make it easier to reach the closing table. Realtors, lenders and title companies are all accustomed to dealing with one sales contract for one property. Just be sure to include a clause in both contracts stating they are contingent upon the other party buying the property located at… and further a simultaneous closing of both transactions. In one contract you are the buyer and in the other you are the seller.
Call me if you need help.
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