On the surface house swapping seems like a win-win situation. The Internet is full of stories of homeowners who have tried unsuccessfully to sell their houses, sometimes watching their properties languish for over a year. They go to one of the various home exchange websites, list their property and state the kind of home they are looking to buy as well as their desired location. They are then connected with other homeowners who are also looking to sell their houses and buy another. The two parties swap properties, and they all live happily ever after.
Online dating meets the real estate market.
House swapping has been growing in popularity in a market that has stagnated for close to three years as the pool of potential buyers has all but dried up. Though house swapping may sound like a great option, and there are indeed several benefits, there are many drawbacks as well. Those looking to enter such a transaction should definitely do some research before closing a deal.
Here is a brief look at some of the pros and cons of entering a home exchange.
The Benefits of House Swapping
There are several advantages to swapping properties:
- House swapping can save a lot of money for all everyone involved. The potential cost savings that a home exchange offers is the probably one of its biggest benefits. Homeowners can generally avoid paying two sets of realtor’s fees, which run about 6% percent of the price of a house.
- Entering into a home exchange is another strategy to help homeowners move a property that they are having a hard time selling.
- Many sellers are open to letting potential buyers see and even sometimes sleep in the home for sale. In this case, it is a lot like buying a home for sale by owner.
- Those homeowners who are in the market for a new home may also benefit from house swapping. In an effort to unload their excess housing, some developers are offering to buy old homes from current homeowners if they agree to trade up for a property worth at least 20% more than their current home.
The Disadvantages of House Swapping
For all the benefits, there are also several drawbacks to getting involved in a home exchange:
- One of the major downsides of swapping houses is that buyer standards may need to be lowered. Those seeking another residence can not be as choosy as they would have been in a traditional home sale.
- Since it is unlikely that both parties will be swapping homes of equal value, it means that one side will have to make up the difference.
- The potential cost savings associated with house swapping can be easily eaten up by other expenses. Some of these expenses may be part and parcel of such a transaction, like attorney’s fees or owner’s title insurance. Other expenses may be unexpected. The anonymity of the web means that people may not be aware of who they are dealing with, and this opens the door to the nondisclosure of information and outright fraud.
- If a realtor was not involved in a home sale transaction, it may mean that homeowners will have no legal recourse if the deal falls through of if there were defects found in the house after ownership was transferred.
In short, the practice of house swapping has both its pros and cons. The best way to approach such a transaction is with a measure of caution and research. In days like these, who can afford not to?