I’ve actually swapped houses, not once, but twice, so I guess that makes me an expert?! Probably not, but my banker told me she’s only dealt with this situation twice and both times have been with me! I’m really surprised more people haven’t taken advantage of swapping houses to save money. Even Bank Rate recommends it.
The first time I swapped houses, I was looking to downsize (read more about that here). The second time I was looking to move to a nearby town that was closer to where Tatym to went to school and Mallory worked since I can work from anywhere. I had listed my house for sale (that’s free to do on Zillow), and then I asked everyone that came to look if they were from that town and if they’d need to sell their house, and if so, could I look at it?
The biggest savings is not having to get a realtor involved. The average commission that a realtor makes on the houses they sell is 6% (source) which can add up to thousands of dollars. Hint, if you do use a realtor, ask them if they will reduce your rate. The few that I talked with were willing to reduce their rate from 7% to 5%.
One of the most asked questions I get about swapping houses is the exchange of monies because obviously one house is going to be valued at more than the other. Swapping house is still selling your home to someone and buying another home from someone (in this case it’s same person), and the closings should take place on the same day. You both sign separate purchase agreements and sale agreements (we had a local title company do all our paperwork for us).
But you do need to establish the selling prices for the agreements. The first swap, we used the assessor’s values. I don’t suggest this. For one, after seeing the appraiser’s value, the value between the two was far more than the assessed value. I wish we had picked a happy medium so I didn’t feel jipped in the deal.
I also don’t suggest using the assessor’s value because when I was going to sell my home, a few lookers told me, “but you only paid XX for the house” (because that is public record). I had to explain the swap scenario and how now I was selling at market value. The second time, we used calculations and came up with a fair agreement.
When one home is worth more than the other, the buyer of the more expensive house pays the seller for the difference at closing. Both times I have sold my house for more than what I bought the next for. With the extra money, I’ve been able to invest some money into the houses, like new carpet and countertops (watch for a new blog post on that).
People have told me I should start a website where people can swap houses. Little do they know, there are already websites like that out there! So if you’re looking to move, consider swapping houses to save some money by visiting the following websites:
I’ve traded houses within a community and within different towns. Maybe my next house swap will be in a different state!