A recent craigslist ad screamed, "I want to TRADE UP." The author of the post offered a five-bedroom home in an Atlanta suburb for a house worth $100,000 more in either the metro Atlanta area, North Florida or Las Vegas. Another listing, by an 84-year-old widow, offered to trade her three-bedroom home in Scottsdale, Ariz., for one in the San Francisco Bay Area, which was closer to her family. A listing on besthouseswap.com advertised a lakefront condo in Branson, Mo., for property "in any other state."
It's no secret that in a down economy, people don't want to buy a house before they can sell their old one. The stress of paying one mortgage is bad enough--the thought of having to shoulder two monthly mega-payments? [Insert heart attack here.] But when the real estate stars align, a pair of frustrated sellers can switch homes with each other. While there are few tax advantages or closing-costs savings, house-swapping promises the peace of mind that comes from unloading your house at the exact time you buy another. Although such trades are still rare, thousands of homeowners are flocking to websites that play the role of real estate matchmaker.
Just a few years ago, Sergei Naumov was a small-time house flipper in the St. Augustine, Fla., area who wanted to sell his home and move to a nearby town. "I had real trouble selling my house," he said. "But I got to thinking that there had to be someone in our shoes in the town where we wanted to move who wanted to live in our town."
In 2007, he launched goswap.org whose 10,000 or so users are trying to swap not only real estate but yachts and motor homes too. Alice McLaughlin, a caregiver in Canaan, N.H., is close to inking a deal to swap her two-story log home for a place in Hawaii in which she could care for people who otherwise must be in a nursing home. "So far, this [site] has seemed like an easy way to get a win-win situation," she says.
Some trades are cross-country, but others are within the same town. Consider the case of Christopher and Melissa Petrocco and Lyca Shan. The Petroccos began feeling cramped in the three-bedroom town house they shared with their two boys in Alpharetta, Ga. Eight miles away, Shan was living alone in a 3,300-sq.-ft. (307 sq m) home that was becoming too expensive and time-consuming to maintain. Though both parties had listed their home with a real estate agent--the Petroccos for two years, Shan for three months--they were unable to sell and had resigned themselves to waiting out the recession when they heard about onlinehousetrading.com "I listed my house, and three weeks later, I got a response from Lyca," Melissa Petrocco says. "We looked at each other's houses, and it worked out."
From there, a swap unfolds like a standard real estate transaction. Both sides have to be approved for loans. On Dec. 30, the Petroccos sold their townhome to Shan for $197,000 and bought her house for $289,000. The Petroccos now pay $500 more than they used to each month on their mortgage. Shan pays $550 less a month and squirreled away the profit.
For Shan, the trade could not have come at a better time. Shortly after the closing, she was laid off from her job as a project manager at a large communications firm. "This was a lifesaver for me," she says of the swap. "Now that I have a layoff package and a smaller mortgage payment, it takes a lot of the pressure off."