Home Swapping, the Hottest Trend in Real Estate Marketing
Posted in Alternative Business Models By Greg Holt, Wednesday, July 2, 2008.Since starting Pad4pad in February of 2008, we have received many inquiries regarding what exactly home swapping is and how it can be used to sell your home. Below is what we know about home swapping and how you can utilize Pad4pad to help sell your home.
What is house swapping? Home swapping began with vacationers who were tired of paying high prices for hotels and staying in hotel rooms. Vacationers preferred to enjoy accommodations much like they were accustomed to in their own homes. Web sites were created for the purpose of offering their homes in exchange for other’s homes for vacationing purposes. This concept has progressed as a viable option for individuals trying to sell their homes. The concept has been referred by many different names such as house swap, home swap, permanent home swap, perm trade and permanent home exchange. Regardless of the name, they all refer to the concept of “I will buy yours, if you will buy mine.”
The home swap concept is sweeping across the United States due to the current decline in the housing market and the inability of home sellers to sell their homes through traditional means. The big confusion is… “How do I do it?” Do I assume the other parties mortgage and they assume mine, do they pay my mortgage and I pay theirs? Do I pay the difference in their mortgage or they pay the difference in mine? All of these are legitimate questions and possible solutions to the potential home swap. Completing a home swap has endless options to use to complete the transaction. Although for most individuals, they currently have a mortgage and are looking to get out. House swapping can accomplish this as well.
The simplest form of a home swap involves two individuals who are looking to move to each others areas. You find each other through Pad4pad. Once you have identified potential home swap partners, you would send them an offer to swap. This offer is letting them know that you have a home located where they want to move, and they have a home where you would like to move. From this point on, the home swap process is exactly the same as the traditional sales process you have experienced in the past. You will schedule showings for each home, make an offer, complete inspections and appraisals, and then close the transaction. The ONLY difference is when you make an offer to purchase; the offer would be contingent upon them purchasing your home. Once accepted, it is recommended that you close on both properties at the same time to make the process easier.
There are many benefits to swapping your home in the current housing market. One of the biggest benefits is that you could avoid price gouging. Price gouging is avoided since both parties of the home swap transaction will be both buyer and seller. Parties realize that gouging each other would create a price war, making the process less beneficial. The most important piece to these permanent home swaps is to be flexible and open minded.
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Submitted by Mel Aclaro on July 2, 2008 - 9:02am.
Interesting model for using the internet as an enabler for pairing. Sort of like a match.com but for real estate? ;-)
It would seem the volume of subscribers would have to be HUGE(!) in order to make a "clean swap" the norm so as to prevent the site from settling into a bunch of non-matching contingent purchases and contingent sales as the predominant type of transaction. Are there any stats yet, I wonder, about the ratio of tit-for-tat matches vs. non-matching contingent transactions?
Seems like an interesting idea, though, if you can get the volume "up there."
Mel
RealtyU.com
RealBlogging.com
Submitted by Greg Holt on July 2, 2008 - 9:19am.
Mel,
Yes, you are correct. Numbers is going to be the key to swap successes. As realtors buy in to the concept is when it is truly going to be effective. If you could imagine the results if all realtors claimed their clients listings and input the exchange information. How effective it would be. Currently we receive many listings by feeds that do not have the exchange info. This is where the owner or real estate agent can claim the listing and input this data. Thanks for the comment.
Greg
Greg Holt
CEO
Pad4Pad, LLC
www.pad4pad.com
Submitted by Jeremy Brandt on July 7, 2008 - 2:40pm.
Greg,
I've had a number of strong comments regarding the rise of the house swapping sites, and I'm hoping you can answer a question that none of the other founders of house swapping web sites seem to want to:
How many completed swaps have happened through Pad4Pad.com, out of how many listings?
(ok, that's 2 questions)
As a concept House Swapping isn't bad, but based on my conversations with other companies it appears that much less than .01% of people (if any) that pay to subscribe to such online services ever end up swapping their home. When pressed, most of the swapping sites dodge the question as something they "don't track".
If it's a free service that is one thing, but the danger is when companies charge an up-front fee for a transaction that has a very tiny chance of ever working out.
What are your thoughts?
Jeremy Brandt
Founder, CEO
1-800-CashOffer
www.CashOffer.com
Submitted by Greg Holt on July 7, 2008 - 6:17pm.
Jeremy,
I wish I could be of better assistance to you. Unfortunately, we do not track or judge our site on the number of successful swaps. Swapping is only a small piece of what we are about. We are a real estate site with a twist. That twist is that we offer the capability to match sellers up with other sellers. The whole tracking piece is difficult because we get many of our listings from data feeds. Those feeds are updated weekly and remove homes that have sold without giving us any data on how they were sold.
I would agree with you that swapping is difficult but just selling your home in this market at all is difficult. Here is what I can give you. I had my home on the market here in CO for a year. No offers. I started Pad4pad on Feb 25th of 2008. Within two months, I had two very close calls on my house. As we have grown, we have gotten a tremendous amount of media attention. I have had to solicit to my clients for their participation in these interviews. The first was a lady from Florida. She said she had two offers on her home for swaps. Another client in Co Springs was in the negotiation process to swap his condo for a larger single family home. The Inman reporter spoke to another of our clients who has had 10 inquiries for swaps. So we know the concept works, but to work effectively it is going to take buy in from the realtors. Once they buy in and all properties listed are posted to swapping sites is when this concept will pay dividends.
In the meantime, I do not propose that swapping is the end all be all to save the real estate market. Swapping should be part of a comprehensive marketing strategy conducted by the real estate agent. It is another tool in the tool box to help them sell their clients properties. It is free to list on Pad4pad and if you only sold one home a year by utilizing swapping, wouldn’t it be worth it?
I apologize for not having hard data for you but the above is as honest as I can be. I hope this help. Let me know if there is anything else I can try to answer for you.
Best,
Greg Holt
CEO
Pad4Pad, LLC
www.pad4pad.com