Home-Swapping Sites No Easy Fix for Desperate Sellers

In an increasingly unfriendly real estate environment marked by a glut of unsold inventory and tightening lending standards, a new niche of home-swapping web sites are offering to help desperate sellers unload their homes. These sites aim to match up two sellers based on their requested criteria, say, the number of bedrooms each home has or whether it's located in a specific school district. The homeowners then arrange to trade properties and take over each others' mortgages. For those looking to move fast, or who can't afford to keep up with their monthly mortgage payments, home swapping can seem like an easy fix — but they should proceed with caution.

Since the subprime meltdown began, around 90 home-swapping web sites have launched, according to Dr. Danielle Babb, a real estate analyst and professor at Northcentral University in Arizona. But, warns Babb, less than a handful of them actually return the results sellers hope for. "Many of them make bogus claims that they can sell your home fast...[or] they charge fees that work in their favor rather than the seller's," says Babb.

However, some sites, such as OnlineHouseTrading.com and Pad4Pad.com, she says, are on the up and up. OnlineHouseTrading.com consistently generates matches between sellers based on their listing criteria, says Babb, and both sites have strict privacy policies and low fees. OnlineHouseTrading.com, which was launched last summer, boasts some 42,000 home listings nationwide and its listings grow at an average monthly rate of nearly 50%, according to cofounder Daniel Westbrook. Launched just over three months ago, Pad4Pad.com already has around 2,500 house-swap listings. And according to founder Greg Holt, its listings are growing at a clip of about 30% a month.

Yet, even as house-swapping sites grow in popularity, their success rates remain questionable. (Both Westbrook and Holt say they don't track the house swapping success stories that result from their site). According to Jeremy Brandt, CEO of Dallas-based 1-800-CashOffer, a national network of real estate investors who buy homes for cash, the probability of a match occurring is very low. "People should be careful about their expectations [because] a very small number of people ever get matched," he says.

For homeowners willing to take the gamble anyway, here's what you need to know before seeking a swap.

Also, be wary of sites that charge a monthly fee to list a property. "A monthly fee...would give them reason to not want to sell your home," says Babb. Instead look for a one-time upfront fee. OnlineHouseTrading.com charges a one-time fee of $20 — no matter how much time it takes to make a swap. Pad4Pad.com also charges a $20 fee, but if you refer five friends to the site (by providing their email addresses) your posting is free.

Unless their privacy policy states otherwise, a site can sell your contact information to real estate and mortgage brokers, as well as foreclosure specialists who will try to sell their services to you, says Brandt. So make sure to read the web site's privacy policy thoroughly before you sign up.