Let us guess, dear reader, are you needing to move, or move out of your property for whatever reason, and don’t know how to do it? Buying a new property without selling the old one or even selling the property itself seem distant alternatives?
Fear not, we have a practical solution for you to leave your neighborhood without headaches: real estate exchange. It is a business alternative for those who do not want to go through the bureaucracy of a real estate loan, or do not have to face the waiting time for the sale of their property.
And, in this post, we at Sky Marketing have prepared everything you need to know to do it safely and saving money! Check out what you will learn in this article:
- What is real estate swap and for whom is real estate swap indicated?
- How to exchange real estate in a practical and appropriate way?
- What are the advantages of real estate exchange?
What is Real Estate Exchange?
Let’s start with the basics, after all, it’s not often that we see this type of transaction happening in the real estate market. Real estate exchange is a type of business in which two parties exchange ownership of assets at the same time.
That is, a giving party offers an item as a form of payment for another item it is receiving from the second party. In this case, as we are talking about property exchange, it literally means the exchange of one property for another.
But this, so that all sides can be satisfied, must be done in full. Which means that both properties must have the same value (equivalence in several aspects). So that neither party feels aggrieved after the transaction.
Even if you don’t have a lot of experience with transactions in the real estate market yet, we advise you to pay attention to the changes in the market in 2020 to make good deals. We also suggest reading essential items in a real estate purchase and sale contract.
Who is the property exchange modality suitable for?
Changes in the real estate market in 2020 came with everything! And COVID-19 left a lot of tension in the real estate market this year. As you can check here. Therefore, it is necessary to pay attention at the right time to enter into negotiations.
We mention this at the beginning of our topic, as the profile of people who are interested or able to exchange properties can vary according to the economy. Also, this real estate exchange negotiation model is more evident in times of economic crisis, and Blue World City offers this exchange.
This is because the process of moving, or exchanging one property for another, can be shorter than other types of negotiations. In addition to evidencing a possible lack of liquidity in the real estate market.
Thus, the most suitable profiles for property exchange are:
#1 – A buyer who relies on the sale of their current property to buy a new one. Since the lack of gross capital to buy another property can be solved with what it already has, that is, optimizing processes.
#2 – An investor who is interested in diversifying their properties. Simply to get income from other types of rentals, or to acquire properties from different origins and functions, such as farms, beach houses, apartments, among others.
#3 – A buyer who has two properties in the city and wants to purchase a property in another location. As in the logic applied in the topic above, if one of the parties has two houses in the same city, it might be interesting to diversify, and exchange one of them for a house on the beach or in the countryside, for example.
#4 – Two families that are moving, coincidentally, to each other’s neighborhood or city. Yes, it’s rarer to happen, but it happens! And it’s the perfect deal, as it doesn’t take a lot of searching, it speeds up the change process, and any situation that would take a certain amount of processing becomes easy for both sides.
How to exchange real estate in a practical and appropriate way
A real estate exchange is the exchange of one property for another, but as with any type of transaction, it is necessary that all terms are on paper. That is, it is necessary to legalize all the terms in a purchase and sale contract.
So, real estate swaps can really do what they usually do for people: make the transaction easier, move real estate, and not give you headaches. It is necessary to set the dates for the exchange of ownership, the terms of the documentation of the owners and properties, in addition to agreeing on paper the real value of the exchanged goods.
Once the documents are up-to-date and the value of the assets assessed, as well as the disproportionalities resolved, it’s time to do the deal. The contract is made by public deed, and must be drawn up in a registry office in all its specificities.
Of course, like all types of real estate deals, there are fees involved even if money is not used in the transaction. But calm down! The fees involved are to pay the notary’s office for the public deed (which you can better check on this link). As well as the Property Transfer Tax (ITBI).
Types of property swaps – precautions you need to take when exchanging one property for another
There are two common types of barter: bartering properties with turns, and bartering properties without turns. The big difference between them is in the use, or not, of money as a form of compensation by one of the parties and kingdom valley housing society offers both types of barter.
Thus, the exchange of real estate with turns involves one of the parties adding in the form of money the compensation for the difference between the two properties. In other words, if you want to exchange a property worth Rs. 200 thousand for one worth Rs. 400 thousand, you have to pay the difference.
On the other hand, the exchange of properties without turns is one in which the exchange is integral. That is, there is no difference between property values, and both cost exactly the same price. The first precaution you should take in this whole situation is with taxes!
The exchange of properties with turns is related to income tax and having an accountant or financial analyst helping you is essential at this stage. The second precaution, in both exchanges, is with the purchase and sale contract and its points. Always check everything before actually closing the deal.
And finally, raise some points that are usually overlooked, such as: what will be delivered with the property, such as furniture, or other material goods. Whether there is a fine or whether one will be established in the event of non-compliance with the agreement. Or if the situation of both properties is in full with justice.
Advantages of property swapping – Why is it worth swapping one property for another?
In case it is not clear all the advantages of real estate exchange, we will list some of them here for you.
- Cash Payment Waiver: Of course, it depends on the type of exchange, but you can get a new lifestyle, a new property, in another location of your choice, without having to pay any bills, or having that famous “conversation with the manager”.
- Negotiation without real estate loan: Although real estate financing is advantageous at the time this post is being written (SELIC at 2.25%!), you will not need approved credit to get the desired property.
- Diversity of Investments or Equity: Remember to exchange a second property in the same city for a beach or country house? That’s right, this is an excellent advantage, in addition to improving assets, quality of life, and serving as an investment for rental.
- Less bureaucracy and greater flexibility in negotiation: Are there documents to be filled in, signed and verified? Yes, but the processes are much faster than someone who still needs to sell their property, collect the money from the sale, look for another nice option, and then yes, enter into another negotiation.
