Looking to sell your house and buy a new one? One option is to find someone who wants to swap houses with you. Unconventional as it may sound, house swapping can actually be beneficial to all parties involved if done correctly.
Swapping houses instead of selling is better because you take away the hassle of and commissions of working with a realtor, you don’t have to wait months to close, and you don’t lose value in your house while it sits on the market.
What is House Swapping?
House swapping is an agreement between two homeowners to trade properties. Each party signs a contract for the property they are receiving. If either of the properties has a mortgage, the lender will be paid out of the sales proceeds when the trade is complete.
People usually house swap with people they know, but there are many websites that facilitate this process by allowing strangers to list their properties and what type of property they would like in return. Not only might you find more motivated sellers on a house swapping site in a difficult market, but you could also save considerably compared to typical estate agent fees.
My House Swapping Story
I’ve actually swapped houses, not once, but twice, so I guess that makes me an expert?! Probably not, but my banker told me she’s only dealt with this situation twice and both times have been with me! I’m really surprised more people haven’t taken advantage of swapping houses to save money. Even Bank Rate recommends it.
The first time I swapped houses (in 2011), I was looking to downsize (read more about that further down). The second time (in 2015) I was looking to move to a nearby town that was closer to where my youngest daughter to went to a private Lutheran school and where my other daughter who has epilepsy worked since I worked from home.
I had listed my house for sale (that’s free to do on Zillow). Then then I asked everyone that came to look if they were from the town that I wanted to move to. If so, I asked if they’d need to sell their house, and if so, could I look at it?
The biggest savings is not having to get a realtor involved. The average commission that a realtor makes on the houses they sell is 6% (source) which can add up to thousands of dollars. Hint, if you do use a realtor, ask them if they will reduce your rate. The few that I talked with at the time were willing to reduce their rate from 7% to 5%.
One of the most asked questions I get about swapping houses is the exchange of money because obviously, one house is going to be valued at more than the other. Swapping a house is still selling your home to someone and buying another home from someone (in this case it’s the same person), and the closings should take place on the same day. You both sign separate purchase agreements and sale agreements (we had a local title company do all our paperwork for us).
But you do need to establish the selling prices for the agreements. For the first swap, we used the assessor’s values. I don’t suggest this. For one, after seeing the appraiser’s value, the value between the two was far more than the assessed value. I wish we had picked a happy medium so I didn’t feel gypped in the deal.
I also don’t suggest using the assessor’s value because when I was going to sell my home, a few lookers told me, “but you only paid XX for the house” (because that is public record). I had to explain the swap scenario and how now I was selling at market value. The second time, we used calculations and came up with a fair agreement.
When one home is worth more than the other, the buyer of the more expensive house pays the seller for the difference at closing. Both times I sold my house for more than what I bought the next for. With the extra money, I’ve been able to invest some money into the houses, like new carpet and countertops.
I’m Swapping With The Neighbors
The following post was originally published on July 11th, 2011 on a now-defunct personal blog.
Houses, not husbands. Cuz I don’t have a husband. And if I did, well, I’m not into that. The official “house swap” will happen next month, and y’all are invited to help us move. I’ll supply the beer cooler between the houses.
So how did this come about? Well, I’ve been talking about building a new house for awhile now. I even drew up house plans last fall and researched lots to build on. Of course, the bank wanted me to sell my current house first, so I’ve been hee-hawing around putting it on the market, as the thought of renting anywhere temporarily just doesn’t appeal to me. And I absolutely refuse to live with my dad again (those were some of my darkest days).
In this small gossip town, word gets around, so I’ve had many inquiries from people wanting to buy my house without a “For Sale” sign in the yard. I declined a few offers, as I had a price point in mind that I’d like to get for my house. And then I got an offer of the price I wanted. Now what?!
So I was chatting with one of my neighbors in the cul-de-sac about how I should probably take the offer, but I didn’t know what I would do or where I would live while I could build. Talking about one thing led to another, how I wanted to downsize as my kids are almost all grown, and they’ve been wanting a bigger house. They have four kids (just like me although younger): one boy and three girls, including a set of twins. Their eldest has the exact same birthdate as my youngest. How ironic, I know.
I find out my new house plans are very similar to their current house plans (and I’d never even been in their house). I currently have six bedrooms plus an office. My new house plans had four bedrooms plus an office. Their house has five bedrooms – one of which can be my office (let the painting parties begin)! My office won’t be in the center of the house, but I’ve decided that may be a good thing, as it is definitely the messiest room in the house (and maybe I won’t spend so much time working).
I’ll only have three bathrooms to clean instead of four (like I wanted). And maybe with the lower mortgage payment, I’ll even hire a cleaning lady. I’m excited that I locked in an interest rate almost 2% lower than I’m paying now. The “new” house only has a two-car garage instead of three, but I’ve been housing my brother’s old Mustang so not using my third garage stall anyway. He finally just moved it to his new house. I figured as long as I get one of the garage stalls, the kids can park outside.
There are some things I’ll want to change in the new house, as I’m sure they will want to change in mine, but it’ll be far less stressful than building again. Anyway, why I am spending so much time blogging?! I have packing to do!
House Swapping Websites
People told me, being an expert and all, that I should start a website where people can swap houses. Little do they know, there are already websites like that out there! So if you’re looking to move, consider swapping houses to save some money by visiting the following websites:
Most house swapping sites let owners list their homes for free and there are never any fees to pay, not even when a swap is agreed. The only time you might have to spend money is if you use a solicitor- which isn’t required but is advised.
Now that I’ve traded houses within a community and within different towns, maybe my next house swap will be in a different state! I doubt it, but my house is currently on the market because I’m building a new house. It would be nice to have a vacation home in a warm state!
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