How Does House Swapping Work?

House swapping is the real estate practice of swapping your home for another person's home for a short period of time, usually for a vacation. House swapping is a fairly simple concept. One person or family exchanges their home for another home for a week or more.

Vacation house swapping usually does not involve the exchange of money, rather both parties use their homes as collateral to fund their vacation or swap. The homeowners agree on a period of time for the swap and enter into a written agreement regarding the swap. After that the parties exchange keys at a specified location and go to their newly swapped location.

Permanent house swapping is not as common but has gained interest as the real estate market has softened. Permanent house swapping is the selling of real estate to a party while simultaneously buying their property. The homeowners enter into a written agreement that the homes will be sold to each other on the same day, at the same time. The agreement states that either both homes are sold or neither of them are sold. This process allows the owners to use the equity and leverage of their current property to buy the other property. Once the homes are closed on, the parties vacate their property and assume responsibility of the other property. In order for the swap to work the two parties must both agree upon the swap and must have the ability to leverage the properties; either in existing equity, borrow power or cash.

References

• ABC News