A new switcharoo for homebuyers

By Nora Firestone

In the search for their dream home, Robin Humphrey and fiance Chuck Jordan anticipated the traditional, time-consuming process. Instead, they happened upon a creative solution they liken to skating on a slick marble floor.

"Smooth," they called it. "A win-win situation."

Last year the couple fell in love with a model home by builder Jack Schoch of J.F. Schoch Building Corp. They'd toured his houses before during Homearama - the Tidewater Builders Association's annual showcase of homes - and similar events throughout Hampton Roads.

The 4,200-square-foot white-brick transitional of their dreams, in Virginia Beach's new Heritage Park development, had all that the two wanted.

But one stumbling block stood fast: First Humphrey had to sell her 2,300-square-foot home in Chesapeake's North Trail neighborhood. Given the market, she expected it would take six months to a year.

Meanwhile, one of two possibilities would likely spoil the romance. Both homes would sit on the market until Humphrey's sold, leaving Humphrey and Jordan uneasy and Schoch atop a mountain of debt, or a freer buyer would scoop the Heritage Park home from within reach of the starry-eyed couple.

Realtors Catherine Poyner and Jobel Daugherty of William E. Wood & Associates, sales co-managers at Heritage Park, had a potential solution: You buy Schoch's home; he'll buy yours.

A home swap.

"Jobel and I had heard of the concept, but were not involved in a transaction until we started working for Jack," Poyner said.

They'd listed several homes on Schoch's new Web site,

www.LuxuryAssetNetwork.com, and had "folks all over the country e-mailing us with listings for Jack's consideration for trade," she said.

Visitors to the free site - about 10,000 a month - can post and search big-ticket items, including boats, cars and real estate, aspiring to "juggle their assets" to best fulfill their needs, wants and financial goals, Schoch said.

Some "swaps" - particularly of home s - are actually deals in which each party promises to buy the other's respective asset for the agreed-upon price and may require individual loans typically associated with such purchases.

However, less-formal arrangements, such as notarized title transfers and owner-financing, can be made as cash flow and the law permit.

Behind the idea

Schoch, 46, launched Luxury Asset Network - initially called Luxury Asset Trader - in May 2008 while anxiously waiting for some of his own assets to sell before he could buy new ones.

"I'd had the idea for years, prior to other house-swapping sites," he said. "It's everything that I do."

Schoch noted "countless" high-priced items he's owned, including automobiles, yachts, motor homes, a twin-engine airplane, commercial properties and high-end homes, some of which are currently listed on the site.

He changes residences every two years on average and is always on the lookout for his next luxury "toy," he said. And he's discovered a world of like-minded people.

The problem they often face, though, is waiting for their assets to sell before they can move on - a hurdle that commonly results in a loss of money, by way of time, dealers and asset depreciation. Schoch wondered, "How can I solve somebody else's problem with what I have to offer?"

When Humphrey and Jordan arrived on the scene ready and willing - but unable - they were all happy to explore the option.

"I had heard of it," Humphrey, 39, said, "probably through the grapevine, on television or from real estate people I'd spoken with about selling my house."

I t's a practice that's been used as far back as builder Bill Darden, executive vice president of Hearndon Construction Corp. in Chesapeake, can remember.

"It's a listing tool called a 'guaranteed sale'- an agreement by real estate companies to purchase a home if it didn't sell," he said.

Darden practiced real estate in the 1980s and has discussed the option with 24 clients in 24 years, he estimated. To his knowledge, swaps make up " a relatively small percentage of transactions." He has participated in two, noting, "It's another tool in the bag to use when times are challenging."

Jordan, 43, said he wondered how the swap was going to play out. T he whole process - from introduction to price negotiation to loan approval - took less than eight weeks.

Schoch, who'd made trades before, said he'd prefer to have sold the house outright but knew it could take up to a year or longer. Although he didn't plan to reside in the North Trail home, he saw value in alleviating the couple's tension and reducing his liability rather than waiting for other buyers.

The only point of negotiation involved price.

The couple would pay $760,000 for the Heritage Park home, and simultaneously close on the sale of Humphrey's at $359,000, or fair market value, minus Schoch's anticipated costs for resale.

Because Schoch planned to resell the North Trail home, his needs were different than if he'd planned to live in it.

"In a trade, the money has to work for the seller and the buyer," Poyner said. Sometimes "the seller cannot offer fair market for the buyer's home because of the fees he has to deduct."

A seller may need to consider costs like closing fees, interest payments and resale commission, "as well as any work or upgrades that might be needed to make the house marketable more so than the other competitive area listings."

Darden concurred.

"You're taking in another piece of real estate," he added. "And you could come into some unforeseen circumstance and not be able to resell it for what you'd planned."

The North Trail home took Schoch about eight months to resell, he said. But having a sure sale in Heritage Park was worth the risk.

Not all home swaps involve reselling a home and the associated costs. An "ideal" situation is different for everyone and would serve those seeking immediate residency as well as investors wanting rental property.

"I wouldn't say we saved any money, because we got what we wanted and Jack got what he wanted," Jordan said.

The value to the couple rested in the time they saved, he said, adding that "you can't put a price tag on happiness."

"It got you to the next step, which is what we're all trying to achieve," Schoch said.

Nora Firestone, nfirestone@verizon.net