What's Involved in
Trading Houses?

Trading houses is extremely rare.

But it's not a complicated process once you find someone who owns a home that suits your wants and needs, and they feel the same way about your home.

That's the toughest part of trading homes.

If you're fortunate enough to find someone interested in house trading, and if you're attempting to put the deal together without the guidance of an experienced REALTOR®, I strongly urge you to consult with your real estate lawyer ...

Before Signing Any Documents

They'll ensure the agreements of purchase and sale are properly prepared and executed to protect your interest. It's possible to have one lawyer act on behalf of both parties, provided nothing is anticipated to occur that could create a conflict of interest.

Frankly, the easiest way to handle house trades is to have a REALTOR® act as dual agent for both parties, provided of course, the agent is knowledgeable and familiar with procedure as well as the special clauses involved. The negotiation process of home trading can be tricky, and having a skilled negotiator could save everyone involved a great deal of stress and frustration.

An experienced REALTOR® can prepare a Comparative Market Analysis for both properties to assist each party with the evaluation process, sharing the results with all parties to the trading houses agreements.

Full Disclosure

... is the best route.

Once the sale prices have been agreed upon, the two contracts are drafted with the usual clauses, including necessary conditions such as financing, home inspection, and Status Certificate if one or both properties are condominium. Obviously, a condition regarding the sale of the other property is unnecessary. Usually, the expiry dates of any conditions would coincide with its counterpart in the other agreement, as would the completion date. After all, each family will need a home to move into on moving day.

Also, it's not important for the two homes involved to be of equal value because each buyer will be arranging a mortgage for whatever amount they require to complete the purchase.

There is another ...

Critical Clause

Each contract should include the same clause stating basically that each agreement of purchase and sale of the properties in the home trading is subject to the completion of the other. If party one refuses or is unable to close their purchase on party two's property, or party one's property sale for that matter, then party two is then not compelled to complete their contract on the property belonging to party one.

Confusing?

If you enter into a house trading arrangement, thereby agreeing to buy the other guy's home, unconditionally, and he, for whatever reason, refuses to close on the purchase of your home, even though you're ready, willing and able to do so, you'd still have to be prepared to close on your purchase of his home, or risk being declared in default of your contract. But without your sale proceeds, that might be difficult, unless you've got sufficient funds to complete it without them.

So, is trading houses complicated? It may sound like it. But with the assistance of a professional REALTOR®, it's not necessarily so. I invite you to explore my website to learn more about buying, selling and trading houses.

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