Author Topic: "Trading" properties - what if both parties reduced sale price as part of deal?  (Read 538 times)

Penelope Vandergast

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OK, hypothetically. I've been reading about how people trade properties, which is basically selling to each other at a simultaneous closing.

Imagine a scenario where both parties are FSBO (and have good RE lawyers) and have decided to sell to each other.

House 1, owned by Party A, has market value of $325K. Remaining mortgage is $150K, and seller needs to pocket at least $100K after closing for purposes unrelated to real estate. So Party A needs at minimum $250K cash out of the deal.

House 2, owned by Party B, has market value of $400K. Remaining mortgage is 0 but owner must pay half of market value of $200K to absent co-owner after selling. So Party B needs to get minimum of $200K cash out of the deal.

Party A needs mortgage to complete purchase of House 2.
Party B does not need mortgage and has enough cash to buy House 1.

What if both parties agreed to reduce the price of each house by the same amount -- say $50K -- so that Party A can get a smaller mortgage, and Party B does not have to hand over so much cash? Does that make any sense? And what am I not thinking of that could screw this up?

Both would be getting below market when they sold -- in order to benefit by buying below market.