Swap, sell to real-estate firm or put it up for auction

The housing market is struggling these days, and many homeowners are looking for alternative ways to sell. There are several last-resort options you might want to consider if you’re stuck and feeling desperate.

Three methods — swapping homes; having it purchased by a real estate company or an employer, in the case of a corporate relocation; or giving it away to the lowest bidder — are helping some homeowners, builders and investors dispose of properties after months, and sometimes years, on the market.

Here are some details on these three strategies, including the pros and cons of each and pitfalls to avoid.

The swap

Buyer: Elliott and Christy Scott, both 32.

Where: A three-bedroom, three-bath home in Decatur’s Clairmont Heights neighborhood. It also has an unfinished room above the garage they plan to finish. It has about 900 square feet of living space more than their previous home.

Moving from: A three-bedroom, two-bath ranch home in Snellville’s Norris Lake subdivision.

How it happened: “The person who we swapped with, her daughter lived in the neighborhood. She had come by and basically said she wanted our house and her house was on the market. When it sold, she was going to come buy our house,” Elliott said. Six months went by and her home, in Decatur, still hadn’t sold. “She basically showed up one night and said: ‘My contract’s running out with my agent. I really want your house. Would you consider swapping with me?’ “

Why it worked: The Scotts were looking for better schools, and the Decatur home was in the strong Fernbank Elementary School district, Elliott said. They had talked about buying her house after that initial visit, but it was about $45,000 higher than the top of their price range. “When she came back, she said: ‘I can extend a discount to you guys. Do you just want to swap houses?’ ” Elliott said.

What they love about the home: The amount of storage space and extra areas such as a downstairs family room that serves as the kids’ playroom. “It’s such a great neighborhood, plus it’s close to everything now … being intown and being near the bike path and all the stores and shops and downtown and the Braves and everything else,” Elliott said. “We just got really lucky, I feel. I don’t think we could have planned it better.”

The nitty-gritty: The main difference was dealing with the same person on both ends of the deal, which Elliott said made it more difficult. “It can be personable on both fronts,” he said. But that also brought advantages, because when challenges arose, such as lending, they were able to work through those obstacles together. “After doing it, when you think that people really need to get out and are having a hard time finding places, it’s a great idea, I think,” he said. “It really worked for us.”

If swapping is a possibility

John Adams, an Atlanta real estate expert and consultant, recommends these three steps:

•

Bring an intermediary to help with the negotiations and buying process.

•

Consider the risk of underestimating the value of your home or overestimating the value of the home you’re getting in the swap.

•

If there is an existing mortgage, make sure you are not violating the state’s due on sale clause.

The agent-aided purchase

Buyer: Scott and Kathy Smith and their daughters, Kaitlyn and Kara.

Where: Four-bedroom, three-bath home with a basement at Great Sky in Canton.

Moving from: Three-bedroom, 2½-bath home in Towne Lake in Woodstock.

How it happened: A visit to an open house resulted in the Smiths trying to figure out a way to buy the Great Sky home, even though their home wasn’t on the market. “I said, ‘I don’t mind going and purchasing a new home, but I am not going to get stuck paying two mortgages for a period of six months or a year, however long this house took to sell,’ ” said Scott, who works in commercial real estate. He contacted the agent, Patrick Comeaux with Alliance Realty Team, and said he’d like to make an offer but it was contingent on Comeaux buying his house. Comeaux found an investor willing to buy their house and then put it on the market, selling it a few months later.

Why it worked: The Smiths got their home, at a price about $20,000 less than the list price. And they didn’t have to go through the effort of putting their own home on the market. “I never had to show it,” Scott said. “I never had to empty it out for sale.”

What they love about the home: The 60-by-12-foot porch that runs along the front of the house “with a view that you can’t beat,” Scott said. It also has a three-car garage, unfinished basement, a see-through fireplace and hardwood floors.

The nitty-gritty: It took five to six weeks to negotiate the sale of both homes late last year. “It was hard playing the buyer and seller with the same people,” Scott said. The main difference from a traditional transaction was talking to Comeaux as he was representing the Great Sky home building, and then having to turn around and talk to him about the sale of their previous home. “One hand, you’re the buyer. Next, you’re working with the same person again as the seller,” he said. “It’s hard to separate, in a way. I had to be a little bit careful because I had to be like any other buyer and getting my best price.” Comeaux said people should realize that if they owe more on their home than they can sell it for, this type of deal isn’t going to happen.

If this is a possibility…

Five things to know when having a real estate company purchase your home.

•

Get an appraisal to determine how much your property is worth and if the type of residence and cost qualifies for the program, said Lisa Williams, co-owner of ERA Executive Realty in Smyrna.

•

Timing could be a problem, said David Moody, CEO/broker of ERA Sunrise Realty, which has offices in Canton, Ellijay, Kennesaw, Lawrenceville and Suwanee. ERA’s Seller Security Plan requires that the home be listed by an ERA agent for 180 days before the ERA Franchise Systems buys it.

•

Expect to get an offer that’s 75 percent to 80 percent of the market value of the property, Adams said. Moody said their offers sometimes are up to 90 percent of the appraisal.

•

Hire a home inspector to determine whether any repairs are needed.

•

Make sure the company isn’t sneaking in charges, Moody said. He said an appraisal and home inspection are often required and need to be paid for by the seller, but there should be no fees to participate in the program.

Another option: Auctioning

An auction is a last-ditch effort because homes rarely sell near market value, Adams said.

“The type of person that goes to an auction is typically looking for a real bargain,” he said. “The type of person that tries to sell their home at an auction is typically near desperation.”

The only sellers that Cindy Johnson, a vice president with Morris and Raper Realtors, sees being successful are banks. Those that have worked are auctions that don’t have reserve prices; otherwise, she hasn’t seen the reserve price met.

“If you’ve got a reserve on a property, you should have just been offering it at that price to begin with,” Adams said. “If you’d be happy with $100,000 for the house, just put it on the market for $100,000.”

A failed project, such as a condo tower or entire subdivision, is the type of property that results in a successful auction, said Neal Heery, an agent with Atlanta Fine Homes Sotheby’s International Realty.

“You’re attracting people by some of the properties being an absolute giveaway, and the properties are essentially contiguous and viewable from a central location,” he said.

But Heery said even a group of 20 high-end homes aren’t enough for an auction.

Johnson said residents are allowed to look at the homes she’s been involved in auctioning and ask the agent questions. They’re sold as-is, and even when you’re able to tour the home beforehand, essential aspects such as the power may be off.

“I would hire an inspector to go to the home and do the best he could to tell me what it’s going to take, moneywise, to fix it up,” she said.

Most of the homes she’s involved in auctioning are typically getting 75 percent of the appraised value. At a recent sale, the home was listed at $196,000 but sold for less than $100,000.

Johnson added that buyers have to be ready to close fast by having their financing lined up. She also recommends buying title insurance, just in case a lien is filed later.