Permanent house trading for another home that is in need of work

[Dean Jacobsen]

Dear fellow investors, rehabbers, and property flippers,

I urge you to add this statement to all your For Sale Listings: (This home is available for sale, OR permanent trade for another home that is in need of work. Full Commission Paid.)

As investors, we are always looking for two things :

1) A Buyer for the house project that we have just competed, and

2) Another house project that is in need of repairs or renovation(s).

The permanent house trade is the easiest (and cheapest) way to accomplish both of these tasks.

And, while not normalized within our market at the moment, we will change that by working together to get more people talking about this great option.

Here is a simple example of the process:

Homeowner “A” owns a home valued at $300,000 (Property 1)

Homeowner “B” owns a home valued at $400,000 (Property 2)

Both parties agree to a trade and sign a purchase and sale agreement.

Homeowner “A” applies for a purchase mortgage loan in the amount of $100,000 plus their share of the closing costs.

(The mortgage lender will give Homeowner “A” a mortgage loan for the $100,000 and their share of closing costs for the $400,000 purchase and regard the $300,000 of equity transfer from their traded home as their down payment towards the new home.)

On the closing date, the escrow company transfers the rights of Property 2 from Homeowner “B” to Homeowner “A” and also transfers the rights of Property 1 and the $100,000, minus their share of closing costs, to Homeowner “B.”

Both sales are recorded, both sellers exchange house keys, and the process is complete!

Homeowner “B” now owns Property 1 (valued at $300,000) and the $100,000, minus their share of closing costs.

Homeowner “A” now owns Property 2 (valued at $400,000) with their home mortgage in the amount of $100,000, plus their share of closing costs.

Both these homeowners can save thousands by not paying the closing costs, real estate fees, taxes, and commissions of two separate transactions, because the two transactions are now simplified into just one.

Many people living in run-down homes just do not have the resources to fix up their home, sell it, and then buy our completed homes. And they shouldn't have too, we need their run-down homes for our new house projects!

It is actually easier for the homeowner of the run-down home to qualify for a mortgage loan for one of our completed projects when they are trading the equity in their current home for the equity in ours.

To the lenders, an equity down payment is the same as a cash down payment. (Run it by your lender(s) and ask them! But just make sure to explain the process thoroughly, so they understand exactly what your trying to accomplish.)

Once we do normalize this option, it will expand our housing market by adding a whole new group of potential home buyers in to the market (those with run-down homes looking for an upgrade,) while at the same time expanding our inventory of working home projects. (A WIN-WIN all around!)

(In the past, the permanent house trade process has been normalized by the example of the two relocating homeowners that want to permanently trade their homes with each other (such as, the one home owner living in their house in NY and another home owner living in their house in Seattle) both wanting to permanently move to the others area and agree to buy from (and sell to) the other.)

This “relocation” example follows the same process as our scenario. (Just our purpose is different.)

Feel free to contact me directly should you have any further questions.

(And, feel free to pass this along or forward the above example to your fellow investors lender(s), investors, partners, marketing teams, and all others.)

Lets get this out there!!

Best regards,