Home builders, sellers and buyers say, ‘I’ll trade you’
An emerging real estate trend is paying off for some Valley companies.
For The Landmark in Scottsdale, real estate trading has accounted for almost 20 percent of its sales the past 12 months. The average list price for the trade homes: $1,100,000.
“We had a buyer prospect who told our sales team, ‘I want this condo and I would buy it in a heartbeat, but I need to sell my home first,’” says Kirsten Brown, vice president of Butte Companies. “We didn’t want to lose that excitement and timing is everything when a buyer is in the heat of the moment. (Butte Companies’ owner, Ed Lewis) asked the location of their home and how much is it was listed for. The dialogue opened and grew from there. That’s where the general concept of trading came from for us.”
The trading concept is especially beneficial for buyers with a singlefamily home, vacation home, or lots they need or want to sell before they make another purchase.
The concept is simple: Buy my house and I’ll buy your house. The exchange takes place on the same date via a simultaneous closing. The sales are contingent upon each other. Since contracts require a closing on the same date for both properties, the bank will not use the monthly payment from the client’s current mortgage as a liability, nor will it use the old mortgage balance in total loan to value ratios. Having fewer liabilities helps the client qualify for the new loan and negotiate better mortgage terms.
Fulton Homes touts its trade-in program with this slogan on its website: “Why stay in an old home when you can trade up to an energy efficient Fulton Home?” It took the trade movement a step further with a Super Bowl ad.
“Fulton Homes saw great response in the heightened level of interest (in the trade-in program),” says Doug Fulton, CEO of Fulton Homes. “It was definitely a touchdown.”
With the local housing market struggling for the past few years, homebuilders have struggled to find innovative ways to find buyers. While trading has been labeled as simply a marketing gimmick by some critics, Brown says it fills a need in the current economic atmosphere.
“Many buyers don’t want to put their home on the market and face the reality of today’s prices or others simply don’t want the hassle of open houses every weekend in their home disrupting their life,” Brown says. “This resolves those concerns and many more. When we make an offer for a trade deal, we don’t focus on the price of our home or the value of their home, we simply discuss the difference in the price between the two. Once that is agreed upon, the rest falls into place.”
If trading is a trend, it doesn’t appear to be one that is going away any time soon.
“The concept is gaining momentum as is exemplified by the ARMLS recent board decision to add a tab in all online MLS listings that allows an agent to list and/or search for ‘trade’ properties in order to pair up your clients willing to trade with those homeowners looking to trade,” Brown says. “This was just implemented in the last nine months by ARMLS, so that to me says they agree it’s not a fad, but a helpful tool agents can use to help their clients sell or buy regardless of the market.”