• Login or Register

In the US the concept of holiday home swapping is being used for permanent home swapping, and if the housing market in the UK continues to suffer, we may well see it this used here.

The idea

The credit crunch, the sudden lack of availability of mortgage finance for both first time buyers and buyers with equity in their properties, and the state of the economy in general have led to a stagnant property market.

There is a solution that is widely used in the US for holidays that could be the answer for some people to still fulfill their dream of moving home, and without spending any money.

Home swaps have been used in the US as an alternative way of taking a holiday for years – allowing people to holiday in the comfort of someone else’s home, while experiencing the different area. Now the concept is being used more often for more permanent home swapping, and if the housing market in this country continues to suffer, we may well see it coming over to this country.

How does it work?

The idea is to find someone in the area to which you are looking to move who wants to move to where you live.

This system clearly needs to have a certain volume of people looking to take part in order for it to be a success. The risk here is that some users will be stuck on the site for months without anyone wanting to move to their region.

There is also a need for people to be realistic about the valuation they place on their property, as well as what they expect to get in their choice of new location. Again, an unrealistic valuation will put off potential swappers and make the process much longer than it needs to be.

Legal issues

There are some significant legal issues to be ironed out in the home swapping process that will complicate matters. There will need to be some form of legal agreement of a transfer of ownership to allow the permanent swapping of property, which should present no significant legal problems.

There will also need to be some way of arranging for a payment to be made between the two parties in the swap, as rarely the valuations of the property prices will match exactly. Any lending on either one of the properties will have to be approved by a mortgage lender in order to proceed.

Legal and financial institutions will treat any home swap as an ordinary transaction of property, whether the full amounts of money changes hands or not is of little interest to them, but the fact that their portion of the investment in your property is protected is far more important.

Why do it?

The main reason to get involved in any scheme that doesn’t involve using estate agents is to save on the commissions that would otherwise have been paid over. Selling, or swapping, a property without the services of an agent is cost-effective and if properly managed, can be less stressful.

This kind of property transaction allows buyers and sellers the opportunity to ‘try before they buy’. As the system is based upon a vacation home swapping system, people should be able to arrange to have a trial period living in the properties. This eliminates the uncertainty that goes along with a substantial relocation.
Disadvantages
Perhaps the biggest disadvantage is there will be no agent present as a buffer in the negotiations. When you are faced with entering into negotiations over the price of your property, the fixtures and fittings and any problems there could be with the property itself, having someone else to represent you can be an asset.

If you are happy to negotiate yourself try to distance yourself from being too emotionally-involved. Make sure you are honest when discussing the attributes of the property you are proposing to move into and make sure you back up points with logic and reason.

The other major disadvantage is that you may be waiting for some time before any suitable properties come up in the areas you are looking, so it could be a good move to have another strategy for moving in place in case home swapping takes longer than planned.

And finally...

Given the precarious situation of the UK housing market at the present time, there is a strong possibility that home swapping will be seen as a viable way for cash-strapped owners to move home without incurring huge expense. Swappers need to keep a close watch over the legal situation of exchanging houses, and will have to keep all finance and insurance companies involved fully-informed.

In the US, examples are emerging of home swappers who are looking to downsize, or new parents looking to move close to good schools for their growing children. Most of the people involved in these swaps have come to the home swap solution as the way forward. One of the advantages to the successful home swaps that have taken place Stateside is that buyers and sellers feel that they know each other already.

As the market in the UK toughens, and less people have the ability to spend out on the expenses of moving home in the ‘normal’ way, home swapping may become much more popular here.

Article Courtesy of Property Finder - www.propertyfinder.com