What Is Property & Mortgage Trading and How Does It Work?

Selling homes can be difficult. Your home may not be at the same value prior to the foreclosure crisis, or you may have a home that you can't unload. A lot of people in Florida have had their homes on the market for years before selling.

The good news is that the housing market is much stronger, so homes are being sold faster than ever before.

But, what happens when you can't sell your home? A new strategy needs to be formed. Right?

A method that works well in traditionally tough markets is property and mortgage trading, or home swaps.

What is Property and Mortgage Trading?

People are willing to trade their homes. The idea is simple:

- You move into another person's home

- The person moves into your home

And it works. You have a right to swap your home, and while there is some legal processes along the way, this doesn't mean it's not possible. Homeowners have become more open to the idea, especially when they want to:

- Upgrade

- Downgrade

Relocation is also a big reason for people swapping homes.

See, this is the same idea that a lot of the older folks have used with their vacation homes. While buying a vacation home in Florida seemed like a great idea, owners tend to get bored and want to go somewhere new this summer.

So, instead of buying a new home, they'll swap with someone in California or anywhere they please.

This is a temporary house swap, and it works very well for people stuck with vacation homes they never seem to use anyway.

But, there are permanent swaps, too and this is what most people are looking for when trading a mortgage or property. The problem is a lot of people tend to back out of the process because it's often more scary and less defined.

How Housing Trades Work

Trade your home? It sounds like a crazy notion, yet it's a simple process that anyone can do. We've seen people trading their cars and other goods – it's finally catching on.

This is done as easily as it sounds.

See, when you sell your home, you usually just sell to the buyer and that's it. You're now free to go look for another property to call your own. But, this isn't how it works with a property swap. Instead, there are two transactions that will occur (in the ideal world) on the same exact day:

- Sell your home to a buyer

- Buy the buyer's home

All of this occurring on the same day is best for all parties involved.

How to Make Sure Closing Happens Just Right

A big mistake that many people make during their trade is that they fail to spell out all of the details in their contract. The use of a contract is vital to your success in a swap because you can put in a clause that states you'll sell your home to the buyer and buy the buyer's home all in the same day.

As per the contract, this allows you peace of mind in knowing the buyer won't back out of selling their home.

The buyer and seller will have to sign a:

- Purchase agreement

- Sales agreement

But, let's say that you're trading a $100,000 home for a $150,000 home, what happens in this case? Well, no one is going to give you $50,000 for free, so you'll have to pay the $50,000 difference. The payment will be due at closing.

If the home is still under mortgage, the lender will be paid the difference.

A fallacy that many people assume is true is that you can't get a traditional mortgage during a housing trade. You can easily get a mortgage, and this will be something that should be included in your sales contract to ensure all parties are on the same page when the trading is complete.

The mortgage company will ask to see the sale's contract in most cases to ensure that you don't have two outstanding loans at the same time.

Why Housing and Property Trades Make Sense

Housing and property trades are easier for all parties involved, and what this does is allow the sale to go through faster. If you find a person willing to trade, you can cut out the need for a real estate agent completely.

Without a real estate agent, you won't have to pay hefty commission fees.

You'll also find that trading allows you to:

- Move into your new home faster

- Not have to show your home to a bunch of strangers

- Remove the need to spend money on storage when moving

You also won't need to rush to find a new home. Think of this as the perfect arrangement when you need to sell a home. Why not sell your home to someone that wants your home, and it just so happens that they want your home, too.

Since both closings happen at the same time, there's no need to worry about the long gap between selling and buying a home.

You'll be able to relocate and move into your new home faster. The same can be done with just property, too. Maybe you don't want that acre on the coast anymore, well someone in the mountains may be willing to swap properties with you, too.

Housing swaps open up a land of possibilities to you that weren't available before.

But, these swaps aren't always easy to come by, and if you're super picky on which house you move into (I.e. it must have 3 fireplaces, a pool and cobblestone), the process will be much longer and harder for you.

You may also find a person willing to trade homes of similar value for an even trade. Some trades may include a car or other assets to offset the value of the home.

Hiring a lawyer is a great option when swapping homes, and this allows you peace of mind in knowing that you've done everything in accordance to the law to protect both parties. If you go into the process without a lawyer, you should have a lawyer check over the contract to ensure it's legally sound at the bare minimum.