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Any advice on trading houses!?
Old 08-25-2014, 06:38 AM   #1
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Any advice on trading houses!?

We have a unique situation that presented itself. We are very close to trading houses with someone. Does anyone have any experience with this? What are pros and cons? They want to pay off $20,000 mortgage in the deal, but we only want to give them $13,000. Any creative ways for the difference? They are dealing with medical issues, and eliminating the remaining mortgage is a big issue for them.

Thanks!
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Old 08-25-2014, 07:33 AM   #2
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If you don't have a great RE agent, don't get one and pay a commision but if you do start asking questions about fees, taxes, etc. You'll pay a bunch, possibly, checking titles, transfer fees etc. If a commision isn't involved find a good CPA, pay for an hour or two, and get his/hers advice before you do it. I've bought and sold houses and commercial property and I have no idea if you're doing a good thing or not. Overall, you have the cost and inconvenience of moving, redecorating and your family has to answer the question of which home you would enjoy living in most of all. Good Luck!
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Old 08-25-2014, 07:59 AM   #3
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I'd hire a real estate lawyer, as a minimum.
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Old 08-25-2014, 08:36 AM   #4
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Good advice thanks! We definitely like the house and neighborhood. We lived there before, and we know the owners well.

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Old 08-25-2014, 02:38 PM   #5
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I'd hire a real estate lawyer, as a minimum.
+1 A few hundred for the lawyer's time can save a LOT of grief down the road.
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Old 08-25-2014, 02:55 PM   #6
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Would this be trading your personal residence or a rental property? In the case of the latter you might want to make sure the deal qualifies as a 1031 like-kind exchange, which isn't an issue, of course, if it's a primary residence. Beyond that, yeah, get a lawyer in this case.
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Old 08-25-2014, 07:27 PM   #7
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Personal home

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Old 08-26-2014, 06:42 AM   #8
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I would think a real estate lawyer who is well versed in such transactions should be sufficient. I don't see what a real estate agent or broker would add. I would think the process would be similar to buying and selling a house other than settlement at closing would be different in that each party would get a credit at closing for the agreed upon value of the property they "sold".
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Old 08-26-2014, 07:09 AM   #9
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You could hire an independent appraiser for each home and go off of those results to determine how much the difference should be. Of course, that might cost a bunch and not come out how you want so you'll have to consider that.
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Old 08-26-2014, 07:43 AM   #10
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Thanks good thought

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Old 08-26-2014, 10:08 AM   #11
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BIL has done this twice, first moving up into a lifelong friend's house A who moved down into his--paying the friend in cash the difference in value. Twenty years later he downsized into his daughter's house B while she and her family moved up into house A and owes BIL the difference in an open-ended loan. The first move was fine, as house A had been well-maintained for the most part until then. The second move was a little more trouble as by then house A had several problems that the daughter's husband is still upset about and paying to fix; on the other hand, BIL has still not been paid back one cent for the swap.

So get both properties inspected before settling on the price, and be sure to have something in writing if there is a loan involved. Also agree on having a real estate attorney involved to handle the recording of the change in ownership, etc.
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Old 08-26-2014, 07:45 PM   #12
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Thanks nice to hear about a couple real situations

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Old 08-26-2014, 09:37 PM   #13
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Be sure to do a title search or pay to have one done to ensure that you are getting a clean title if nobody will be purchasing Title insurance for your benefit.

Normally this is required when a lender is involved, but probably optional in this case.

-gauss
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Old 08-27-2014, 08:49 AM   #14
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Good tip thanks

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Old 09-07-2014, 04:10 PM   #15
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So amazingly enough, it looks like the trade is going to happen. The biggest issue now is the fee that our real estate agent is demanding. I will post this in another thread, rather than derail my own.
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Old 01-04-2015, 03:32 AM   #16
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As the OP, I am closing out this old thread with the summary of the house trade. The trade when very well! It was really fairly simple once we were able to get all of our heads round the idea that it was just two, separate house sales. We mainly focused on the difference in the prices, since the buyers of our house wanted enough cash out of their house to be mortgage free. It helped that I created a small spreadsheet, and we did all of the negotiating face-to-face.


It also helped that we were good friends before, and that we remained good friends throughout the sale and after the sale. However, I think we were very lucky in this regard, because someone you perceive as a friend, could turn quickly in a business situation.


The biggest challenge was the logistics of the move. Again, easy since we were friends, but nonetheless, it was a continual challenge. Most of the time in a sale, someone moves out of their house first, so you move into an empty house essentially. In the trade case, we were both wanting each other's space. So we stored much of our items in the moving truck over the weekend, while they moved out. We also shared half of each other's garage for a while.


All in all, it went great, and it provides great stories for moving forward. Especially since we moved back to our old neighborhood, so the neighbors know both families.
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