Using Barter To Sell Real Estate

Using Barter To Sell Real Estate

Purchasing property using a barter currency has a large number of benefits. Following is an example of a typical property transaction:
· A property might be selling for $100,000 in the cash economy
· The seller has to pay 3% cash commission for the sale to their real-estate agent
· An average property may sit in the cash market for 6-12 months before being sold.
· If the owner is already living elsewhere then the house is often empty and costing them for council levies, maintenance and other charges.
· The buyer has to come up with 10% of the value of the property to get a bank-loan for the balance

Selling On The Cash Market: 
· The property is for sale for $100,000 cash
· The real-estate agent receives $3,000 cash when the property is sold
· Advertising the property for sale has cost the seller $3,000 cash
· The council levies (rates) and maintenance has cost $3000 between when the property has gone on the market and when the property sells
· The interest on the mortgage on the property is $3000 before the property is sold

The cost to sell the property is $12,000

The income from the sale of the property is $88,000 (less costs)

Selling For Part Barter/Part Cash:
· The property is for sale for $70,000 cash and $30,000 barter
· The property sells quickly because:
     o Barter exchange members can use their own surplus time/goods to generate barter dollars
     o Barter exchange members may have excess/unspent barter dollars
     o Barter exchange members can pay $30,000 barter and get a loan from the bank for the rest of the amount (Their 70% cash needed “Loan to Value Ratio” will be very favourable to the bank)
     o The barter exchange would normally charge a cash fee on the $100,000 – which might be 7% of the transaction value to the seller ($7000)

The seller ends up with $63,000 cash plus $30,000 in a barter currency. And, more than likely, the barter sale occurred much faster than a cash sale would have.

The new owner might rent out the property to pay off the mortgage and benefit from capital gain as the property increases in value over time.
- posted by Ormita, May 27, 2010

To learn more about using barter to build your business and make money, contact Terry Brandfass with ITEX Corp.