The house shown above is for sale or trade. What is a real estate trade? Most people can only think in terms of cash from a lender to a seller for real estate transactions but in fact Trading something of value for real estate happens all the time just not as frequent as a cash sale does. There are lots of things that would stop a trade from happening. Like realtors who want some cash and can only think of one way to get it. From the seller’s proceeds! Most banks want to turn over there money and write new mortgages so they like to get paid off when sellers sale property especially if thrcan loan that money out at higher rages of interest. Most sellers like to get loans out of thier names when they sell a property and dont want the hassel of keeping up with a property or potentially taking it back from a buyers who did not pay the mortgage or having to catch up on the mortgage when a seller fell behind. These are just a few of the things that need to be addressed when you trade a property but nevertheless trades still happen. Why?
Sometimes there are things more important then cash! Like what you say? Getting out of ownership of a property. Out of ownership of a property is just that no longer wanting to own a property. There are not property problems just ownership problems. There are times when not owning a property is better then owning it. Divorse, death, cash short falls, balloon payments comming due, increases in interest rates and payments, etc etc etc.
A trade is not for everyone there are some people with no equity who need to just get a cash sell and be done. And there is always a cash price that every property will sell for. The sellers may not always like that cash price but there is a price nevertheless. When I first purposed my trade the sellers did not like the idea! In fact they rejected the ideal all together. However after they took time to analyze the market and the property in particular they realized that maybe just maybe a trade may be in thier best interest in the long run today.
If the mortgage market continues to deny access to real estate investors with more than 10 properties then there will always be a market for trades. If we see a double dip in property prices and another increase in the supply of available properties there will be a market for trading properties.
Does a trade require an appraisal? NO, only two people need to agree on the properties value; the seller and the buyer. Does the property need to have outside consultants evaluate or approve of the condition, marketability, or use of the property. NO only the seller and the buyer. In some ways trading a property can be easier than a cash sell and faster.
Lastly, lots of people are familiar with the 1031 exchange rules. A trade is an exchange and may qualify for a 1031 exchange depending upon the particulars of the trade. the 1031 exchange rules are modeled off of concept of the trade.
The 4-plex shown above is similar to one that I would like to trade the house for.