Let’s make a deal: Moving property via exchanges
If you’ve got a house, but would like to move up, down or across town, you can put your house on the market and hope it sells. With more than 1,900 properties listed for sale right now, you may be waiting quite a while, unless your home is in perfect condition, in an amazing neighborhood and listed at an attractive price.
Those with a fair amount of flexibility, equity and a sense of adventure can also consider residential real estate exchanges.
Sharon Vaughn with Coldwell Banker has been involved with three property exchanges this year and anticipates seeing even more in the months to come as property owners get more creative in finding ways to make a sale.
“There are a lot of things that we can put together, but they have to put their home on the market,” says Vaughn. “If it’s listed, we continually look for things that could work; it’s the networking that makes it happen.”
Vaughn participates in the Colorado West Creative Marketing Group, a highly confidential, yet informal meeting of real estate professionals who network together to try and match buyers and sellers.
She also has several properties listed on the Coldwell Banker exchange Web site (cbrealestateexchange.com), where property owners can indicate what they currently have and what they’d ideally like to have.
Sometimes, buyers are able to get exactly what they want. More often than not, property owners should remember the Rolling Stone’s advice: You can’t always get what you want, but if you try sometimes, you just may find you get what you need.
One of the more recent Vaughn Team exchanges involved a small acreage property in the northwest area and a newer home in the Chatfield subdivision in the southeast area.
The Chatfield owners wanted to sell their property and buy a small acreage property, but there were plenty of other homes available for sale in Chatfield and the owners paid more for the home than the current market price, which meant they were selling at a loss. The owners of the northwest home wanted to sell so they could move to the Front Range.
Vaughn, who represented the original Chatfield owners, approached the listing agent for the northwest property when it was first listed to inquire about a possible trade and was told no. However, after the property had been listed for several months with no offers, Vaughn asked again.
This time, the owners reconsidered their goals. Buying the Chatfield property didn’t put them on the Front Range, but it did eliminate the maintenance of 15-acres, which was one of the reasons they wanted to sell. Trading down also enabled them to own the home in Chatfield with no mortgage.
In an ideal situation, the original Chatfield owners would have been able to sell their home for more than what they paid for it, while the original northwest owners would have been able to sell their property and move wherever they wanted. However, the market isn’t ideal for anyone except cash buyers right now, so everyone else has to be willing to compromise.
In order for a property exchange to work, both homes must appraise properly and go through title review. If buyers are getting a loan to make up the difference between the amount of equity in their property and the price of the property they’re purchasing, they must follow current lending guidelines.
“None of this stuff is easy, it’s quite difficult,” says Gregg Cranston, broker associate with RE/MAX 4000, who is also involved with the bartering group. “It’s the education of both the buyer and seller as to how these things can benefit each other.”
To negotiate a successful exchange, agents and their clients must discuss needs and wants. Clients must be flexible about wants, and agents must respect needs. Three bedrooms and two baths may be a non-negotiable need for a family of five, while a dated pink bathroom may not be a deal-breaker. While some exchanges are two-way, with buyers and sellers essentially exchanging houses, some may be three-way, or may involve non-real estate property, like a boat or an RV.
Real estate agents aren’t the only professionals who have discovered bartering. Mike Maves, a local builder whose homes are frequently featured in the Parade of Homes, has traded for less expensive properties in order to sell a few spec homes he built in 2008. He’s also working on a possible trade with a prospective client for a home Maves hopes to build this spring.
“I’m willing to hear anybody’s ideas and see if it will work,” says Maves, adding, “It’s got to make sense.”
Homeowners who have lived in their existing home for at least five years out of the last eight should remember that they are eligible for the $6,500 tax credit if they buy a different primary residence and close by June 30, 2010.
When residential properties are traded, it involves two separate sales, making the transactions eligible for the tax credit, if all other guidelines are met.