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I'm thinking of relocating but I'm stuck with the house and the mortgage. I researched the possibility of house swapping but all I found was about when you go to a vacation you can swap your house for a week. That is not what I thought the house swapping was. Not sure what it is called then.

Is it possible to relocate to a different US state and exchange the house with a different house of the same value which is on the market offered for sale? Simply take my mortgage that I'm paying now and apply it to a different house in a different state? This way my current house will be put back on the market for sale and the one I move into will be taken by me.

I worry this isn't possible because I never heard of it and maybe everyone would do it because it would make relocation so much easier.

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    Why would the seller want your old house instead of cash that could be used to buy any house? – Nuclear Wang Feb 15 '17 at 20:34
  • I thought the bank would pay him with the money they get from my current house's sale. Now I see it's not that simple. – Grasper Feb 15 '17 at 20:36
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    Technically a swap of real estate is specially treated by the IRS, called a 1031 Exchange, but still someone has to want to take your house in exchange for theirs. Also, this has no effect on your mortgage, and the lender will need to be paid off in full - they won't accept a swap. Such a mortgage swap was actually possible years ago, I'm told, in the form of "assignable mortgages", where you could effectively "take over payments" on someone's house as part of a sale - but I don't believe any lender retains any such practice anymore, for rather obvious (credit/repayment) reasons. – BrianH Feb 15 '17 at 20:36
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    A 1031 exchange is applicable to investment (rental) property, not owner occupied, which have a high cap gain exclusion. – JoeTaxpayer Feb 15 '17 at 21:50
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    @BrianDHall I recently obtained a VA mortgage (USA obviously) and it has a provision for transferring that mortgage to another person. You can't transfer it to another house though. – Kat Feb 16 '17 at 2:20
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Possible but difficult

You would have to find someone in the other state who wanted to swap. This is conceivable but difficult if you want the houses to be the same value. How do you find the one person who lives in the right place now and wants to move to the right area?

The normal way

The normal way this situation is handled is to simply put your house on the market. At the same time, you find a new house in the new location. You arrange for a new mortgage for the new house and make purchase contingent on selling the old house. Your buyer pays off your mortgage and gives you a bit left over that you use as a downpayment on the new house.

Note that you take a loss on closing costs when you do this. This is why if you are in the position where you move frequently, you may be better off renting.

Sometimes an employer will help with this, paying for a long term hotel or short term rental. This can give you more room to sell and buy the houses.

An alternative

If you have to move right now, immediately, not in a few months when your housing situation is fixed, consider double renting. You rent out your mortgaged house to someone and pay rent on a new place. You may put some of your stuff in storage until you get into your permanent place.

The downside is that it can be harder to sell a house with a tenant until you are close to the end of the lease. And of course, you are probably not in the best position to get or pay good rent. Your situation restricts your options. You might get stuck in this situation for a year so as to get the time that you need to line up a buyer.

Of course, you may get lucky and find someone who wants your old house as an investment property. Such a person won't be bothered by a tenant. But they usually want a good price. After all, they want to make money off it.

We buy ugly houses

There are those operations that advertise that they buy ugly houses. They want a good deal. You'll probably take a bath. But they can buy quickly, so you can move on quickly. No waiting until they find a buyer.

Swapping

And I'm not saying that you can't do a swap like you want. I'm just saying that you may find it difficult to find a swapping partner. Perhaps an investment person would be up for it. They take your house in trade for their house, letting you stay in their house until they can fix up your old house and either rent it or sell it. The problem is that it may be hard to find such an investor who can handle a house where you are and has a house where you need to be.

I don't have a good suggestion for finding a swapping partner other than calling a lot of realtors and asking for suggestions. Maybe a bit of online checking for properties where the owner's business is managing the sale.

  • so your suggestion is to sell my current house. Forget about buying a new house until I settle down and in the meantime rent? – Grasper Feb 15 '17 at 20:30
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    @Grasper I suggest you read the answer again - he is suggesting that you start looking for a new house, and make an offer to buy it on the legal condition that your current house sells within x period of time. This contingency condition is relatively common in real estate transactions. It puts you at a disadvantage from someone who makes an offer without such a contingency (ie if you offer 150k contingent on selling your old house, and someone else offers 145k cash, the sellers might prefer to just save the headache and take 145k in cash). Because this is common, this may not be a big problem. – Grade 'Eh' Bacon Feb 15 '17 at 20:44
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    and until my house is being sold I'll be living on the street, right? – Grasper Feb 15 '17 at 20:45
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    No - typically, real estate transactions give you the chance to "rent back" the property you're selling until you find a new house. The property transfers to the new owners, but you pay them a pro-rated amount to continue occupying the property until your situation changes. – Jesan Fafon Feb 15 '17 at 21:51
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    @Grasper no, until your house is sold, you live in your house. – Tom.Bowen89 Feb 16 '17 at 9:59
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Another possibility that you might consider is to find a renter for your current place and move to your destination. If you have a lease for your renter, your mortgage company can consider that as income for approving the purchase of a new house. I did something similar when I purchased my current home, but I was also able to get approved without selling or renting the old place.

There's no reason that someone couldn't create a house swapping site for longer-term than a week. It may not initially have as much demand as a 1 week swap, but there are no such existing services that I am aware of.

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