Sunday, February 3, 2008

Trading Houses - I'll Buy Yours if You'll Buy Mine

There is a new trend in real estate. It's called house trading. Here's how it works. You and I live on the same street and really like the neighborhood. But my home is too big now that the kids have moved out, and your family needs room to grow. Or perhaps I live in Florida and just got a new job in Minnesota. You live in Minnesota, have recently retired, and want to move to Florida. Whatever the scenario, the basic concept is simple. I like your house; you like mine. So we swap houses.

This option has grown in popularity because of two reasons. First, as the real estate market has deflated, people have become nervous about buying a new home before their existing home is sold. Imagine the financial nightmare that would occur if you buy my home, but, at the last minute, I don't buy yours. Now you own TWO homes (and two mortgages!). When you swap houses, the homes transfer title at the same time.

The second reason swapping has become popular is because of the internet. There has been a steady growth of internet sites that specialize in home swaps. They started as short-term vacation swaps - come stay in my home in California for two weeks while I live in your New York City condo. As people became more comfortable using the internet, sites were developed that specialize in permanent house trades. Some of these include,, and

As you might suspect, swapping houses is not as simple as "I like your house, you like mine". Usually there is a disparity in value that needs to be addressed. If your place is worth $300,000, but mine is only worth $200,000, then I need to give you my house plus $100,000. In most cases a Realtor is not involved. While this will save money on commissions, it also means you are responsible to make sure you know what you're buying in terms of value, location, condition, etc. And because the pool of available homes is limited, you need to be willing to settle for something other than your dream home.

House swapping may not be for everyone, but it's another choice for people who are having a hard time selling their home. And in times like these, you may want to consider all the options.


Sherri said...

I'm curious about how property taxes are handled in "House Trading" transactions. Is each property reassessed at the time of the swap?

Ida Abelson said...

Hi Sherri -

Property taxes depend on where you live. Some places, like California, reassess homes each time they change owner. So in California, the homes would be reassessed when the owners swap. Some places, like New Jersey, reassess every couple of years, regardless of whether or not there is a new owner. So the home would be reassessed during he next general assessment.