Continued: House swapping a growing niche in real estate market

Sher and Luke Bruun have outgrown their two-bedroom Apple Valley townhouse and are itching to get into a house with more room for their family.

Since May, they've tried to sell the house on their own by using real estate websites, but with six other townhouses for sale on their street, they've had little luck. So they're looking for someone willing to trade a larger house for their smaller one.

"There are lots of people trying to sell a home who want to downsize into something smaller and cheaper. Maybe we could make a match," said Sher Bruun.

With buyers in short supply, more people are choosing to explore house swaps. Many of them have to sell because of a job change, or because they need more -- or less -- space. Many aren't interested in becoming landlords and renting their homes. And for some, a swap is their last attempt at avoiding foreclosure.

With hundreds of thousands of homes for sale advertised on traditional real estate listing services, house swapping is a small niche of the market, but it is growing. Craigslist, a free classified advertisement website, added a "Housing Swap" category about two years ago in response to user demand. It logged 11,000 listings nationwide in June and the company said numbers have doubled from last year.

Homeowners post a description of the property they're trying to sell and of the type of home they're seeking. When there's a successful match, the owners negotiate to buy each other's homes. The sale and purchase of the two properties is typically done at the same time, so no one is left paying two mortgages.

For example, the Bruuns placed an ad on Craigslist offering their $208,000 townhouse in exchange for a four-bedroom home, for which they would pay up to $300,000. They've had four queries and are considering an exchange with a homeowner in Lakeville.

"If it works, it will be a win-win for both of us," said Sher Bruun.

As in this case, the houses are rarely of equal value. Both parties will get their home appraised and agree on a price. If one is worth more than the other, the buyer of that house has to make up the difference.

There are drawbacks, said Walter Moloney, a spokesman for the National Association of Realtors. When pursuing a house swap, you don't get as much exposure because you're dealing with a smaller pool of buyers than you would if you listed your property on the traditional Multiple Listing Service, which is fed with listings from Realtors.

"House swapping is not a conventional transaction, and not a lot of people know about it," he said. As you would with any real estate transaction, he advises hiring a real estate agent or attorney to ensure that the process goes smoothly.

Cathy Splettstoeszer admits a house trade is a long shot, but she's willing to try it to save on real estate commissions. She's hoping to avoid losing money on the sale of her four-year-old townhouse in Chaska, which she recently posted on Craigslist for $212,900. Her dream home? A downtown Minneapolis loft. "The swap would be cool if we could pull it off," she said.

Match game

Websites that facilitate short-term vacation home exchanges have been around for years, but many new online home trading sites, including Domuswap.com, Pad4pad.com, OnlineHouseTrading.com and BestHouseSwap.com, focus on permanent real estate trades.

BestHouseSwap owner Michael Pastushkov says that judging from his growing number of total listings, now up to 1,300, more people are using this marketing tool.

"It's an electronic format to help people find each other and trade their homes that has worked in Europe," he said. Although completed trades aren't tracked, he's received e-mails from people who have successfully closed on properties.

While Craigslist and other sites are simply a "bulletin board" of listings that describe what the seller has and what he or she is seeking, Online House Trading, for example, is like a dating service that electronically matches homeowners' requirements. Most are free, but some charge a fee for listing a property or for upgrades.

Carol and Larry Kindschi are seeking a swap on Craigslist but also have listed their two-year-old penthouse condo at Reflections at Bloomington Central Station with a real estate agent for $749,000.

They'd like to buy a condo or home in Portland, Ore., to be near relatives and are willing to negotiate a lower price for the right exchange.

So far, they've had six queries from the swap site, compared with a couple of showings in the past year from an MLS listing.

"We've had interested Portland people who have family in Minnesota," said Carol Kindschi. "They're in the same situation that we're in."

Once they've found a prospective match, their children in Portland will preview the home. The couple plans to use their real estate agent to close the deal.

"These times call for being open and creative," said Kindschi. "Let's all move in this river of change together."

Lynn Underwood • 612-673-7619