Making a House Trade

Doug in Columbia and his wife are in a starter home and have some equity. They would like to upgrade, and the builder is offering to buy Doug’s house so that they can buy the builder’s house. Is it a good deal?

QUESTION: Doug in Columbia and his wife are in a starter home and have some equity. They would like to upgrade, and the builder is offering to buy Doug’s house so that they can buy the builder’s house. Is it a good deal? Dave says it’s a good deal.

ANSWER: I think this is a good deal—assuming that the sale price of the builder’s house is a good price. You’re convinced the price on yours is pretty close to fair. Builders are pretty desperate. Usually, they will discount a house on trade-in further because they want to make sure they can get back out of it. I’m not sure he’s even going to break even on this. I don’t know that he’s going to net $100,000 out of it by the time he sits on it for a little while and tries to sell it.

I’m thinking it’s a pretty decent deal. I don’t think you’re stealing his house. I don’t think you’re getting the deal of the century. But if you like the house—and it sounds like it’s affordable to you on a 15-year fixed—I don’t see anything keeping you from doing this. I don’t think you took him to the cleaners or anything.

Put down as much as you can and still have an emergency fund in place. Go as hard as you can go on it.