Barter!
So, you don't have much money to put down on that new home or maybe you're starting a business and want to save cash for working capital. BARTER IS SMARTER!
Things to barter
What are some things you might trade for real estate.
- Cars and trucks
- Boats
- Jewelry
- Guns
- Livestock -- or include the livestock when you trade your farm for a city home.
- Prepaid services
- other real estate.
Examples of Barter as down payment
You don't have to barter for the entire purchase price. For example:
- You are trying to purchase a business priced at $100,000. You offer the seller your $15,000 free and clear car as a down payment and ask the seller to carry a note for $85,000. The seller agrees, but asks you for a purchase price of $105,000 for making the concession.
- You just finished college, started a new job and don't have any spare cash, but you know it's better to own a home than to rent. You do own a fine collection of electronic equipment that was the envy of your dorm. You find that $31,500, 2 bedroom offering owner finance and you offer the sellers $32,000 with your $3,000 worth of home electronics, computers and CDs as a down payment, asking them to pay your closing costs. The wonderful and creative real estate agent agrees to take your stuff in lieu of commission and the sellers say, "OK."
- You can't find an owner finance deal, so you go get pre-approved for a loan. With your debts and income, you qualify for a $70,000 home, but you'll need a $2,100 down payment plus closing costs. You find a seller who will take your classic (second) car in trade at $5,000 and pay your closing costs. With a conventional loan, you may need to have the car appraised to show it is actually worth at least the $2,100, but this can still work.
- Your lender told you that with your credit (or employment) history, you need at least 20% down. You ask that seller to take your car in trade and "carry a second" for $14,000. The lender gets his necessary "loan-to-value", the seller gets that English roadster she always wanted and you get to be a homeowner instead of a renter.
Still need help?
You can trade anything of value for real estate of any sort. One of the keys to making barter work in real estate, is finding an agent who can be creative in making it work and who won't scoff at the idea from the beginning. Even the richest people can be cash poor, so if an agent can't (or won't) help you because you need to barter for the property, find another agent. As with any more difficult transaction, it is a good idea to retain the services of a buyer's agent in your barter search.