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House and Home Magazine - July 1956 - Return to Main Search
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Text Summary via OCR:

with used-house selling techniques. One big builder simply turns his trades over to several brokers, widening his trading area.

The need for specific information on trades is urgent. One manufacturer has published a series of six booklets on trading, which he plans to distribute to builders.*

Booklets explain trade plan

Prospective buyers need information on trading, too, so many builders are preparing informative and helpful booklets telling the trade-in story in simple style. One of the most clever booklets is prepared by Andres Oddstad  a portion of it is reproduced on page 172. Ads, too are plugging trade-”from elaborate ads like those for White-cliff Homes (page 129) to simply a line in a classified ad. John Clarke of Portland just adds: "Trade your home 4-1 of ours," often plugs trades on a theatre-marquee which hangs over his office door.

Almost all builders agree that the sale starts with the new house, that in order to make a sale you need a new house so good the buyer is eager to move in and the quick closer is: "I'll take your old house in trade." How the details work out is not half so important as making it easy for the buyer and making sure the buyer understands your plan.

Hughes starts inter-city trades

Dick Hughes of Pampa, Texas, carried this rule of making it easy for the buyer to its obvious conclusion when he took houses in trade in Wichita Falls and Dallas in order to sell new houses to buyers who were being relocated in Bartlesville, Okla. to work for a petroleum company. He paid fees to builder-friends in the old-house

β…ž Minneapolia-Honeywell sells series for $1.

cities, has the chance to do the same thing in Salt Lake City.

This inter-city deal kicked off cooperative trading for Hughe-”points up an up-to-now unexplored source of trades, the relocation market.

In Louisville, the nahb office reports approximately 5% of new house sales are trade-ins. In Long Island, where most people said: "No trades yet.' one realtor has been trading since the first of the year.

Trades are big part of total sales

Several builders report their trade sales are as much as 30% of their total. And, especially in the higher-priced-house market, most traders say they make sales they would never have made without the trade-in help.

Of course there are builders who say they are trading when actually the "trade" is dubious: one big builder merely takes a deposit, offers to "help." If after three to six weeks the house is not sold, he refunds the deposit and the deal is off. In effect, he is "betting" the old-house owner that the old house will sell in order to convince him to sign up for the new house.

Some banks are cooperating

Banks are friendlier to trades than they once were. In fact, one banker, Hayden Calvert of Prudential Federal Savings in Salt Lake City, has said: "The trade-in program is one you can sell to a lender in this tight money market because it is profitable to him." (See page 130.)

The case histories in this issue are as varied as the builders and realtors who are trading. But they share one thing in common: these stories are each part of an overall trade excitement which isn't small potatoes any more. America is in the used house business.

New FHA regulations make it easier for builders, realtors and developers to trade

"It would be a great help if fha would . . . modify the now costly requirements for trade-in financing" H&H Round Table Report. Nov. '55.

Now, new fha rules make trading one- or two-family houses easier because:

1.    Now, real estate brokers and land developers can borrow in their own names on Sec. 203 trade deals (as well as builders, who always could).

2,    You don't have to make "major repair- or any repairs at all to a house taken in trade to qualify for financing.

The house does have to be in "sound.

livable" condition, in accordance with minimum property requirements.

3.    As previously, the builder, realtor or developer gets a commitment that lasts four months for 85% of the loan insurance that the owner could get from fha on the house.** Biggest loan allowed is $17,000. Realtors are asking Congress to push the amount up to 90%.

4.    You can get a bigger commitment from fha if a house taken in trade was originally built under fha inspection.t fha has told its field offices to make information readily available on whether a house qualifies for these better terms.

The revisions announced by Commissioner Norman P. Mason mark the third move by fha to help trade-ins. First two were part of the Housing Act of 1954 which: (1) reduced the difference between the down payment on a new fha house and an old fha house, and (2) gave builders two commitments, one for the house "as wa- the other for the house "if improved".

** Owner get* 88% of the first S9,000 of the house's appraised value, plus 73% of value above $0,000. % Owner ffsis o loan of 93% of first $9,000, so the trader gets 85% of 98%, not 85% of 88%.