22 Jun, 2021

Real estate swap: how it works, advantages and what precautions you should take

The process of putting a property up for sale always requires time and patience and in many cases sellers are anxious, as they depend on the sale of the old property to be able to move into a new home. However, selling itself is not the only way to get a new place to live. Still with little prominence, but already well known in the real estate market in BH and in the metropolitan area, the exchange of properties has been a great alternative for those who do not have much time and need to acquire a property in the short term.

In addition to being practical and advantageous, the exchange also facilitates the salesperson’s life, increasing the number of interested people and also the possibilities of selling the property. And although there are already people who choose this type of business due to the lack of time to wait for the process of buying and selling, there is also a significant number that still does not know about this process of exchanging one property for another or transferring it. the difference in cash. Therefore, below you will know in detail how the exchange of properties works and the precautions that must be taken so that the agreement does not bring a headache in the long run.

What is real estate swap?

The exchange of real estate deals with a way of obtaining a new property, exchanging assets at the same time with another person. There is no restriction on the type of property, which may be houses, apartments, land or commercial properties.

The exchange of properties also does not require that the values ​​between properties are equivalent for the exchange. Thus, it is possible that in this exchange there is a financial compensation agreed between the parties involved.

Like any legal agreement, the exchange of real estate must be done with legal certainty. This means that it is recognized as a legal process. Thus, it is necessary for the parties to establish a prior agreement, highlighting the values ​​of the transaction. For this, there must be an assessment of each property.

How does the exchange of properties work?

Unlike buying and selling, the exchange of real estate does not require payment to be made in cash, but through equivalent goods. That said, it is already interesting to keep in mind that most exchanges do not occur in exchange for properties of the same value, since factors such as location have a significant influence on the market value.

However, there is also the alternative of settling a possible difference in cash, which is an option applied to any type of property, house, apartment, lot or property to be built. It is even possible to make a swap contract for a lot for the construction of a certain condominium in exchange for units after the end of the project.

There are two simple ways to exchange properties:

  • through the exchange of one or more goods with equivalent market value;
  • through the exchange of one or more goods with payment of additional value (makes it).

Of the types of contracts, the most recurring and consequently those that also have a greater chance of closing, are those that enable the seller to receive in addition to the property, a cash value that can be equivalent to 50% or 60% of the agreed property value. However, although there are cases where the equivalent percentage is higher, in them it is also more difficult to perform the closing.

What are the assets that allow the exchange contract?

A property subject to exchange is defined as unique and involving everything that can be incorporated through it (naturally and artificially) – such as housing units, warehouses for organizations and construction of condominiums for institutions. In this case, there is a type of contract that can be made from the following options:

  • house or apartment already completed or to be built;
  • lot from land dismemberment;
  • building constructed for the purpose of sale as an isolated or autonomous unit;
  • distinct real estate development unit;
  • land from allotment;
  • land purchased for the purpose of sale, with or without construction.

Therefore, a real estate exchange cannot involve any other types of assets and resources, such as shares, quotas or vehicles in the negotiation.

How ITBI works in the swap

As we well know, whenever we transfer real estate, it is necessary to pay the ITBI (Tax on the Transfer of Real Estate). Thus, it is necessary to pay this fee when exchanging real estate. Recalling that the payment of the ITBI in this case is made for all the properties involved.

Normally, the basis for calculating the ITBI is the property’s market value. Then, just multiply that number by the rate of the municipality where the properties are located. This value usually varies between 2% and 4%.

Who is the swap contract for?

One of the reasons that have made the exchange process interesting is the difficulty that some owners have in selling, often due to economic crises. In addition, it is known that many consumers depend on selling the property they already own before buying a new one, and this ends up being seen as a problem, as this is a process that takes time. Using the exchange, it is known that this time for sale is reduced and the process of acquiring a new property can become easier.

That said, here are some of the consumer profiles that can benefit from the swap contract:

  • an investor looking for properties with the purpose of exchanging the properties he already owns, in order to move and diversify them;
  • a family that needs to change regions and intends to change the current house for a property located in the future address;
  • a couple who like to go to the beach a lot and choose to offer their own property as part of the payment for a house or apartment on the coast.

How do you know if the owner of a property is open to the exchange agreement?

Due to the lack of communication and even an understanding of the exchange agreement, the seller often does not express his interest in the exchange – which does not mean that he has no interest in this type of agreement. In other words, it is always interesting to ask beforehand, if that is your choice.

The most common types, which allow for easier trading, are those that occur in exchange transactions, thus guaranteeing better liquidity to the owner. Therefore, it is necessary to understand about the market and, above all, to analyze the exposed proposal, since a property in “neighborhood x” may seem to be an excellent investment, but it may also not be in accordance with the intention of the owner at that time.

One of the most effective ways to avoid setbacks is to visit and get to know the property you intend to exchange in person. After all, in some cases you can see something in the photo that does not match reality – be it because of the light, angle and even a photoshop.

And besides just visiting real estate, it is interesting to work in parallel with the sale of your own. That is, put the property for sale and together visit those that fit your profile. This way you increase your chances and what happens first will allow for a better negotiation. In addition, attention should be paid in the case of exchange of real estate, since the contract must be made by public deed, and it is necessary to state the date of delivery of the goods and the responsibility for the taxes.

Advantages of making an exchange

In addition to facilitating the process of buying and selling real estate, among the advantages of the exchange, the main one is taxation. When there is no compensation in the exchange, the negotiation ends up exempt from income taxation, since in the exchange there is the same monetary value between the properties. What happens is that the IRS sees the property as the same declared by the former owner, making the payment of the tax unnecessary.

In the case of makes, when the customer complements the budget, the tax must be paid by whoever received the amount, which will be proportional. Still, there is also the very common advantage that is the exchange of areas for built properties, since many people who own the land and can wait for the construction of the property have more advantage when making the swap contract than when selling.

Another benefit of the exchange agreement is the independence of high-interest loan and financing installments, in addition to less bureaucracy due to the time of negotiation. After the exchange of the property, the current owner of the property will be able to do with him whatever he wishes: he will be able to rent, resell, live or even build a new development.

In the video below you can see other advantages of the exchange and better understand this process:

Are there any restrictions in the exchange agreement?

The answer to that question is: yes! If you want to sell through exchange, you must have the property paid off, since the new buyer has no responsibility for it.

Although it is a good choice, the exchange of real estate is not a simple transaction, when it comes to negotiation. When dealing with a transaction, there is a need for knowledge of what is being done and a clear communication from both parties, so that the exchange does not end in an exhausting process or that any of the parties feels injured. In these situations, the help of a well-qualified professional is essential, and it is the broker’s job to mediate interests and assume responsibility for a safe negotiation for both.

Therefore, a primary factor that involves the exchange contract is that the two parties know that the properties in question are different and that they have different characteristics, not always in the way that each one wants. On this front, if there is really interest, it is necessary that the parties are willing to give up points that would otherwise be considered essential. Otherwise, the exchange of property will not be a good alternative.

Properties that accept exchange in BH

The demand for properties that accept barter has been so high in BH that Casa Mineira decided to create its own filter to assist this type of search. Nowadays in our database we have hundreds of options that accept another property as part of the payment.

 

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