Can’t sell your house? Swap it
You can tell how bad the real estate market is by how creative homesellers get.
According to recent story by Jennifer Levitz in the Wall Street Journal’s RealEstateJournal.com, the market must be pretty awful.
Levitz wrote a story about people who instead of selling their homes, swap them. You can read the story here. What happens is that homesellers who can’t sell their properties find other sellers in the same situation. The owners then swap their homes, buying each other’s properties.
One site that allows owners to do this is OnlineHouseTrading.com. The site asks owners to list what specifics about the home they are trying to sell and about the residence they’d like to buy. It then matches prospective owners. GoSwap.org works in much the same way.
This is a creative way to help owners move their homes. It’s hard to imagine too many owners willing to go this route, though. For a swap to work, owners have to be willing to compromise, have to be willing to purchase a home that’s less than their ideal. But maybe if you’ve had your house on the market for a long enough time, a swap doesn’t sound so bad right now.
I think this is definately a creative way, and your last line says it all. If someone has been trying to sell their home for years, they might see this as the only choice. I wonder how they find each other. It’s interesting that there is a company that can provide this service.
Hmm. My mind is spinning as to the potential tax issues here. It’s clearly not a 1031 exchange because there’s no commercial investment. And there’s no real gain or loss, so no real capital gains issues. But on a state and local level, who would pay the real estate taxes? I mean, technically the owner is still responsible though I expect it would governed by some kind of contract. The potential for fiasco would, I think, be high.
Hi, Everyone:
Thanks for your comments. I think the fact that there are even house-swapping sites out there — we’ll see if they actually generate much business — is just more evidence that this residential real estate market is a truly bad one.
I’m the guy interviewed on CBS Jerry Stussman stuss4long@gmail.com. Although not my situation consider (a. neg am coming due..default or swap? (b job relocation, lost, etc and can’t sell (need to downsize) (c. vacancy so no cash flow (restructuring to retire), (etc. etc. So swap…. or wait until you’re up upside down, out of money, out nof credit, etc. The real question is why realtors refuse to help their clients by NOT looking for a swap, suggesting it, etc. I actively look for the opportunities to do the financing (I’m a loan guy) It’s complicated at first. After you’ve done many, it’s simple! It really helps people and yep, it makes me a living too,
As for taxes, pay them. It means you made a profit!
“Hmm. My mind is spinning as to the potential tax issues here. ”
Actually it is much simpler than most of us imagine. The same capital gains tax rules would apply as if you sold your home or investment property. In the case of personal residence, up to 500K in cap gains for a married couple is tax free. So if an average family swapped their $250K home for another one of $200K value and realized, say, $100K in cap gains on the first home–no tax is due. The second home’s tax will be determined by the same approach when it is sold or swapped.
I think it is so funny people that always say the TAXES. Yes if you sell a house and make a profit unless you fall under the exemption of living in it for 2 years, you will pay taxes! The certain things in life are death and taxes. Taxes, Taxes, Taxes You sold your house that is the point.
Does anyone think tese people sound smart by saying “Potential Tax Issues” Should we all just sit around and state the obvious?
Moderator can’t you just delete dumb people?