Investing in Real Estate:If You Can’t Sell Your Home, Try Trading

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Most people look at a real estate transaction as a buy or sell proposition. To a large majority of the folks out there it’s pretty simple. Bring cash to buy a property. Get cash when you sell a property. Obviously in many instances there are banks which give loans or they have loans to be paid off but it’s all done with money.

There are situations where selling or buying with cash is impractical or not time expedient. And there are other ways to accomplish the task of exchange. For instance, if you are having a difficult time disposing of an asset in a timely manner, there could be several reasons. At this time, you could be competing with foreclosures; banks aren’t as willing to lend as much money to a buyer. This makes it a lot harder to move or buy your property, and also makes it harder to get your price.

The first question is why are you selling or buying a property? The second question is what are you going to do with the money if you sell or how much money do you need to buy? It could be for investment, and it could be for dissolution of a partnership or marriage. The reasons for moving to another equity position, whether cash or another asset can make a big difference upon potential solutions to your needs.

An unorthodox solution to this all too typical scenario may be equity trade and exchange. In the old days before money, people had to trade things. Let’s look at things this way. You have a legitimate appraisal and your property is worth what you say. I’m looking for a property like yours. I have a legitimate appraisal for 2 houses of my own. You and your partner are retiring and closing the business and need to sell a warehouse. I need a warehouse like yours. One of you has a child who needs a house and the other wants to move into a smaller house. There aren’t any cash buyers for your warehouse. It’s been listed for 8 months and still no qualified buyers. If we can come to terms, you get 2 houses, I get a warehouse and everybody is happy.

It isn’t always quite that simple. One person may have more equity, one person still may need a loan, however the equity in a property being used as a part of the trade will be considered a down payment by the lender, thereby meeting their requirement for a 30 or 40% down payment. There are legitimate ways to move the assets. Cash added or other properties (like that RV you never use) added into the deal can balance out the values for everyone concerned.

The thing is that if you are selling and you are only going to reinvest in some other property, you may be able to trade right into that and get the full value of your property applied to the new property. Old thinking is to keep lowering the price until it sells. Well here’s some new thinking that may be food for thought. You keep your value and you get what you want as well.

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