Can't sell or buy: Then maybe swap
A strategy common among vacation-home owners gains traction in stagnant real estate markets
Published: Tue, May. 27, 2008 12:30AM
Modified Tue, May. 27, 2008 05:25AM
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closeCHERRY GROVE, S.C. -- Sellers frustrated by a lack of buyers in today's sluggish real estate market are looking to swap property with other sellers -- an "I'll buy yours if you buy mine" strategy.
In the midst of the real estate slowdown, the notion of trading houses is gaining traction, and development companies and Web sites are cropping up to facilitate the trend.
It's an idea not entirely new to coastal residents in the Carolinas. Timeshare and second-home owners have traded vacation time at their coastal properties with people who own condos or houses in other tourist destinations. But with the housing market going through a correction, buyers and sellers are taking the idea to a new level.
Is home-swapping for you?
There are roadblocks in swapping property, and in most cases, the lookers vastly outnumber the takers.
The biggest challenge is finding a good match, said market analyst Tom Maeser of the Coastal Carolinas Association of Realtors in South Carolina.
"It certainly has advantages, but you're really narrowing your ability to swap it quickly, because you have to wait for that perfect scenario," he said.
He recommends getting legal help, because swapping homes involves making two transactions simultaneously.
"You don't want to end up owning two houses, basically," he said.
You also need to think about financing. The deal won't work if the owner has little or no equity in the home.
More Business
Sites that aim to connect real estate traders, such as Pad4Pad.com, OnlineHouseTrading.com and DomuSwap.com, have taken off.
DomuSwap of Sarasota, Fla., started last year and has more than 4,000 listings, including 81 from South Carolina and 128 from North Carolina.
The states hardest hit by the real estate slowdown have the most listings on the site -- Florida has 1,323 listings; Arizona has 389, and California has 332.
"The market is causing a lot of people to look at this as an option," said David Moskowitz, creator of DomuSwap. "A lot of people are looking at, 'I can't sell. What's the next best thing?' "
Developers such as Harrison Development in Greenwood, S.C., have been hit by the downturn and are actively marketing exchanges as an alternative to buying property outright.
"Our policy on the trade is: We'll consider almost anything," said Windy Greene, a sales director for two of the company's developments. "That might include an airplane or a motor home or anything that has an established value."
Valeria Young wants to trade a $450,000 condo in Little River, S.C., for property in New York.
Young, who lives on Long Island, bought the condo two years ago at the peak of the housing market as an investment, and now, with no tenants, she's having cash-flow problems.
"We would be better off owning rental property in New York where at least we could rent out the unit and come really close to paying what we owe on it," she said.
She put the property up for sale for a few months but got little response. Then she decided to try for a permanent property swap on Craigslist.
"I've gotten a lot of different interest tradewise, but almost nothing from straight selling," she said.
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