How to Barter Real Estate

You can barter at virtually any point in the process of real estate transactions, as long as the seller is mutually interested. In addition, some real estate agents are members of barter clubs and would be willing to barter instead of receiving payment for services. If you're dealing with property that's for sale by the owner, however, the process of bartering can be even simpler.

Instructions

1. Decide what you have that would be of value to the seller. If you're able to perform some beneficial service or if you have other property that you'd be interested in trading, ask the seller if he'd be willing to trade instead of doing an all-cash transaction.

2. Determine what the barter will cover. You may want to just barter for a down payment, or, if you have something of value comparable to that of the real estate, you just might be able to barter for the entire deal.

3. Make the exchange with the seller. There may be some complications if a real estate agent is involved, however, as you have to pay the commission one way or the other. If the real estate agent is willing to barter or is a member of a barter club, you might be able to come to a mutually beneficial agreement. For all those government fees: forget it and just pay cash.

4. Keep all necessary records of the barter, just as you would for a cash transaction. Follow all local laws as well.

5. Calculate the fair market value of all the property exchanged. This is necessary for tax purposes; the IRS and other government tax authorities treat barters as sales (or income) just as they treat cash transactions.

Tips & Warnings

• Barter clubs make bartering much easier by expanding the pool of people willing to accept barter value. Dealing with someone who is in a barter club can make bartering simpler.

• Bartering can have various tax consequences, so consult with tax law or with an accountant to find out how bartering will affect you come tax time.