In a move that shows that the real estate market has apparently come full circle, a Weston businessman is using the modern technology of the Internet to conduct a type of transaction that dates back further than recorded history: bartering.

Although other business-to-business Internet-based bartering systems have been established, Richard Cravatts’ Web site, www.BarterItOnline.com, also allows members to buy and sell parcels of real estate. The Web site, just over a month old, has listed about $2.7 million worth of property.

Part of the challenge of putting together a Web site is to address a niche that has not been addressed before, said Cravatts, who added that real estate is just one of many categories of barter items on the site. He said he has worked with both bartering and real estate transactions for years, and it was a natural progression to bring the concept to the Internet.

BarterItOnline facilitates trading between businesses and professionals by creating a common currency, called E-dollars, which members use to buy and sell at the site. Members of the online community earn E-dollars whenever they sell goods or services on the site, and they can apply that currency to any purchase on the site. The site is supported by transaction fees from buyers that are assessed at the time of purchase.

Although theoretically a BarterItOnline member could accumulate enough E-dollars to purchase a piece of property outright, Cravatts said he envisions people using the barter system as a down payment on a parcel, and he promotes that type of transaction as real estate for nothing down in the digital economy.

For example, if someone is buying a piece of property for $100,000, the bank will give you a mortgage for 80 percent of the value, Cravatts said. You can take care of the down payment through bartering, assuming the person you’re dealing with has use for $20,000 worth of barter. The bank will look to see you made the down payment – they don’t care what form it’s in – and give you a mortgage for the rest, so you just bought a piece of real estate for no money down.

Currently, the site lists about 41 undeveloped sites for sale in New Hampshire and Maine, as well as a timeshare unit in Martha’s Vineyard.

The benefit from the seller’s standpoint – and this why people do a lot of transactions in barter – is that if you’re the seller and you give good terms for the transaction, there’s less negotiation, and you generally get a lot closer to your asking price, Cravatts said. With no cash down, there’s a lot less haggling.

On the buyer’s side, they get to conserve cash since this is a cash-less transaction, he added.

Though he touts the advantages to bartering real estate, Cravatts admits there are limitations. You have to be a business owner to take advantage of this, he said. You have to be able to sell items online before you can buy the land.

Business owners may also not think to turn to a business-oriented site such as an online bartering community when looking to make personal purchases. But business owners have personal lives too, Cravatts countered. People will frequently use barter credits from business transactions for personal things, like taking trip a with their family. Real estate is not what business owners come to the site for, and they don’t normally look [to a bartering site] for it, but that’s just because previous sites haven’t had this.

‘Tricky Business’
Several of the parcels up for barter are being sold by a Massachusetts attorney with several years’ experience with land deals and bartering. Bartering his land online opens up the possibility of bringing in more transactions said the seller, who asked not to be named.

If you have property for sale and demand all cash, that will limit the sales because not everyone has all the cash, the seller said, or he might not have the power or the connections to get all the money from a bank.

I wanted to open up other avenues to make sales go forward, he continued. I want as much action as possible coming across my desk.

The properties for barter on BarterItOnline are the seller’s first in the online environment, though he has completed many similar transactions without the use of the Internet.

I’ve done some wonderful exchanges, he said. But you have to be careful. This can be a very tricky business.

None of the advertised properties on BarterItOnline has been sold, Cravatts reported, but he attributed that to the fact that the site has only been officially up and running since March 27. It’s too early right now, he said. People have to sell their services first to be able to afford the land. If a business person were to join the site offering a set of goods or services Cravatts thought would sell quickly, he said he would extend them a line of credit, which could be used to purchase the real estate.

Though the properties on the site right now are situated in the Northeast, Cravatts said his site has national and international reach, so properties from other areas could appear. The Web site also has an area for commercial property, though there are no listings yet.

There isn’t any office space because this format is good in times when the space is not selling in a cash market, he said. If this was Houston in the ’80s, you’d see business space on here.

I’d like to do office space; that would be useful, he continued. Who wouldn’t want to do it? But as you know, it’s a hot market out there right now.

Experts Wary
Industry experts say they’ll be observing this latest addition to the world of real estate transaction.

Bartering will be interesting to watch, said John M. Peckham III, executive director of the Real Estate Cyberspace Society. There’s nothing new about bartering, but the Internet brings something to real estate and bartering that should make it interesting.

The speed of the Internet, along with the widespread information available and the sense of urgency online could all affect the transaction, Peckham said. The combination could be quite powerful.

While real estate auctions have proven themselves thus far on the Internet, Peckham said the impact of online property bartering is still somewhat uncertain.

Some types of property lend themselves to bartering, like a timeshare or undeveloped land, he said. I don’t think it will have a major impact on the single-family, owner-occupied residential unit market though. That market is already very well attended to on the Internet with big sites like Realtor.com.

In terms of big sites, Cravatts is hoping to form strategic alliances with well-established business-oriented sites to tap into their audiences. He is also seeking venture capital funding with which he hopes to expand the team working behind the scenes for the site and establish business partnerships.

This is just another form of money, Cravatts said. People are obsessed with cash, but once they get cash, they turn around and get something else with it. This just removes the intermediary, he said of the $16 billion per year bartering business in the United States. Still, as the unnamed property seller observed, not everything can be done through bartering.

It’s another way of moving products or services, but it can’t be the only way, he said. I still need cash to pay the phone bill and the electric bill.