HOMEFRONT : Trading Places: Surviving the Slump

A brand-new, $1.7-million Playa del Rey home just wouldn’t sell. Then one agent had a novel idea: Why not open it up for a trade? Soon it was a done deal, swapped for two lower-priced coastal investment properties. The investor who traded for the larger home moved right in. The new owner of the two lower-priced homes moved into an apartment and put them back on the market with much better prospects than he faced with the big house. And the agent who arranged the deal pocketed commissions on all three properties. Everybody’s happy.

That’s life in the Southern California real estate market, where times are so tough that real estate agents are resorting to Monopoly-type tactics to keep their properties moving.

“Everybody does it. You provide as many options as you can,” says Adrian Grant, manager of the Fred Sands Realtors Westwood/Century City office, which handled the Playa del Rey trade. “Thirty percent of the transactions we handled last year involved trades.”

Although houses and condos are sometimes simply swapped one-for-one, most often they’re part of a package deal. “For example, if a buyer has a condo worth $200,000 and wants to buy a home for $650,000,” Grant says, “he’ll use it as a down payment and take a loan out on the $450,000 balance. The seller ends up with a small condo that he can keep or sell. He also has a much lower debt ratio than before, and he’s walked away with $450,000 in cash, rather than wait possibly another year for a buyer.”

“You do it as a function of the market,” says Sheila-Anne Teisher, a broker with Re/Max Palos Verdes Realty. “In a hot market, it’s not worth the extra trouble. But if you really want to get on with your life, then a trade, if it works, is probably the fastest vehicle.”