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 Trading homes is another way of selling property and is not as complicated as it first sounds. The concept works especially well for investors or second home owners who are interested in moving assets to different locations for many reasons. In order to be successful at sealing a deal, both parties must be fair in pricing and open to creative trade options for smart investing vs. "love" buying.
How does property trading work? Basically, it's "I'll buy your property, but only if you buy mine", and often times, additional cash is involved since one property may be worth more than the other. The key is to spell out in the contracts that the closings should take place simultaneously. The swappers sign separate purchase and sale agreements for each of the properties being traded. The contracts spell out the price of each property. If one property is more valuable than the other, the buyer of the more expensive property pays the seller for the difference at closing. In other words, if you swap your $200,000 house for a house worth $300,000, you would pay the seller $100,000 at closing.
The exchange takes place ideally on the same date through what's called simultaneous closing, and both parties pay off any existing loans and obtain new financing on the property they are buying.
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