The concept of trading houses is not a new one.  It was around when I started in this industry nearly a decade ago, and it was around when my father was just launching his career in 1974.  What is unique, at least in terms of the local Real Estate market in the greater Phoenix area, is that the current climate makes the seemingly farfetched idea more feasible today.

Until the woes of the past year and a half, the Valley maintained a steady appreciation schedule for nearly 15 successive years.  The market may not have been wholely dominated by sellers until the brief spike of 2005, but sellers certainly held their share of pricing and negotiating leverage.  During this time, any buyer who came to a seller with a proposal for trading properties was met with a rueful grin, pat on the head, and told to run along.  There was simply no need to jump through the hoops of such an exchange when ready, willing and able buyers were congregating on every street corner.  Folks just wanted to get cashed out conventionally, and then they would find a new home of their choosing. 

But as evidenced by Starbucks recently replacing the bold caffeinated goodness of its Café Verona blend with the watered down insult that is Pike's Place roast, all good things come to an end. 

With the credit crunch a very real factor in today's Real Estate market, lenders are no longer tripping over themselves to finance any buyer with a pulse.  Slow credit, no credit, even a bankruptcy?  Well, you're basically out of luck if a new home is on your wish list.  Sprinkle in a healthy dose a consumer trepidation which has arisen in conjunction with the tumbling of prices in many corners of the Phoenix metropolitan area, not to mention the bloated inventory level of active listings, and you get an environment where selling a house is no easy feat.  Not at the price you are hoping for, at least.

That's the bad news.

The good news is that there are still plenty of buyers in the market for a new home.  They are simply unable to act.  Why?  Because many of them are trapped in properties they cannot sell, or fear they will not be able to sell.  They are buyers in sellers' clothing.  The trick at present is to figure out a way to mine this untapped demand.

Enter the trade scenario.

I don't know how many times recently I have had visitors to my open houses lament their inability to move on a property because they have not sold their home yet, but it's typically at least once per sitting.  I do know that many of the non-distressed sellers who have homes on the market right now are looking to either downsize or upsize.  Despite knowing that a terrific buy is out there for them, they can't seem to bite the bullet and price their homes for immediate sale.  The fear of giving a house away, only to find that the expected deal on the other end is not as sweet, is too great.  So they sit, and sit, and sit on the market some more, eager to move, but unsure of how to proceed.

In a market such as ours, with such an abundance of homes that are not selling, a trade scenario is one way to take the fear out of the equation.  There are trading sites on the internet where interested parties can list their homes and troll for others.  I find that most tend to grossly overprice their homes on such sites, but that is to be expected.  After isolating a property that looks suitable, there will be negotiation on the price of each home. It's not as simple as finding a willing trade partner and striking a deal on price, however.  I would certainly never advocate attempting such a trade without the representation of a knowledgeable Realtor.  In a typical transaction without agent involvement, it has been my experience when observing from a distance that one party almost always gets taken to the cleaners.  Remember, the idea of the trade is to reduce risk, not amplify it.  Separate contracts should be drafted for each property, and will likely include some type of mutual sale contingency (imagine if one loan funded, but the other didn't!).  There should be standard inspections and appraisals performed to protect the interests of each party.  Trying to navigate one transaction without professional involvement can be tricky enough, but two at the same time?  That's simply disaster waiting to happen.

In a coming post, I will outline some of the pros and cons of houseswapping, including an interview with an associate of mine who recently completed a swap of investment properties across state lines.  In the interim, please feel free to contact me for additional information or resources for exploring whether this alternative option to a standard sale is right for you. 

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Paul Slaybaugh is your source for Scottsdale AZ Real Estate

Whether your interest is buying, selling or trading houses in Scottsdale, please contact me at

(480) 948-9450

paul@rayandpaul.com