In the world of real estate, trade equity is the money that is given when a prospective buyer sells an existing property in order to finance the down payment on the purchase of a newer property. Trade equity can also be applied to the sale of other property to help finance the down payment or greatly reduce the purchase price of a new property. Trade equity is most advantageous when a person or company wishes to buy a newer, larger property, but is unable to do so without first liquidating the property he or she owns. In a difficult economy, when property is not selling, accomplishing this task may be problematic. Trade equity helps benefit both the buyer and seller as the existing property is usually let go for less than the buyer originally paid. This move allows the buyer to properly finance the purchase of a larger or more expensive property without the burden of maintaining an unwanted property that isn’t selling.
