Real estate trading involves property owners entering into agreements whereby they swap properties rather than entering into separate purchase and sale agreements. Some real estate brokers specialize in organizing real estate trades and in certain countries, there are websites specifically designed to facilitate these kinds of agreements. Issues related to property tax, capital gains and unpaid liens mean that real estate trading can be far more complex than conventional types of real estate transactions.
Ideally, real estate trading involves two sets of property owners exchanging deeds to properties that are roughly equal in value. If no liens exist on either of the properties, then the owners can swap deeds simply by filing paperwork at the county courthouse. In such instances, the parties may not choose to involve either a real estate agent or a contract lawyer so as to keep the total cost of the transaction to a minimum. Rules for calculating property tax and insurance premiums vary between different nations and in many instances the new owners may have to pay more or less in terms of tax or insurance than the previous owners.
People typically do not want to swap properties with their neighbors and in most instances real estate trading involves people who live in very different areas. Consequently, the prices of the properties involved in the swap may be different. The situation becomes more complicated if one or both of the property owners have outstanding mortgages since laws in most countries mean that liens have to be paid off before a property deed can be exchanged. In such instances, the two parties may elect to involve a real estate agent or contract attorney who is tasked with carefully negotiating a deal that suits the interests of both sets of owners. Many such deals are not true swaps because one party may have to pay some cash to the other owner to offset the difference between the prices of the two properties.
During severe recessions, real estate trading often becomes popular because financing is harder to find and that means that many people are unable to buy houses. In such instances, a homeowner may agree to a swap even if that means losing some money, because the deal represents the only way to move out of a particular property. Some people enter into short-term swap arrangements during which they stay in each other's homes on a trial basis. If both parties are satisfied with the properties in question, the temporary swap may turn into a permanent real estate trade.
