Here's How to Get What You Want When You Barter

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As we think about our holiday budgets and purchases, it's only natural to feel excited about what we'll receive -- and a little apprehensive that it won't be what we want.

From regifting to trading your unwanted presents with a family member for something better, the holidays give bartering a short-lived existence on most Americans' radars. In much of the world, bartering is a thriving way to exchange the items one has for what he now needs, but America's corporate retail structure leads most to rightly believe an attempt to barter with a merchant would be met with disgust. A large marketplace for bartering has emerged with the Internet, helping those who dare trade for anything from small trinkets to cars.

What Should You Barter for?
  • Clothing. The thrift shop provides a venue for clothes to be exchanged but with an added markup and money transferred. Whether it's with a roommate, friend or through a site like SwapStyle, bartering can expand your closet tenfold. That item that's been relegated to the back of your closet could be exactly what another person is looking for.
  • Furniture. From furnishing your apartment to your company's workspace, bartering can be an affective way to minimize waste and maximize product utility. This was Joseph O'Neill's experience at The Expert Institute. "Working in a growing startup made me realize the potential of bartering, and improved my skills for doing it," OheNeill said. "I've found bartering for (and with) furniture is usually the most useful, especially in New York City. We were able to barter several of our old Ikea desks for a few Polycom telephones when we moved into a larger office, which helped us avoid paying someone to take the desks and get something very valuable in return. The key to successful bartering is to find what you want first and then offer a trade. You're far more likely to get a good deal if you initiate the transaction rather than posting that you want a trade and waiting for offers to come in."
  • Gifts and crafts. Especially during the holidays, a barter system can help you decorate and celebrate cheaply. Gifts can of course be bartered, but if you're crafty, what can you get for your handmade Christmas cards? If you're not, what can you offer to get such one-of-kind cards? A smart tactic with neighbors or extended family is to for one person to buy plenty of ornaments and the other to buy a large number of Christmas cards. Swap half your stash to minimize purchases and cut down on costs by buying in bulk.
  • Services. "I learned to trade stuff for stuff, stuff for services and services for services," said Pablo Solomon, an artist and designer. With private practices, most anything can be traded so long as the owner agrees to it. "If you barter for medical services or professional services, make sure you are completely satisfied with the provider and that you are treated as any other “cash” patient or client," said Gary Oshry, president of New England Trade.
  • Technology. With the holidays bring a surge of technology purchases, as these items are often discounted on Black Friday. With every crop of new iPhone, Android and laptop iterations is a sea of buyers eager to buy the second most-recent model. Using a barter system can help you upgrade your phone at no cost.
How to Barter Successfully

Those bartering must understand the difference between profit and loss. Although value can be intrinsic, those who barter must have an understanding of the value of the items traded to barter effectively and without remorse. Furthermore, it's important to understand that some items (collectibles, art, etc.) are more valuable to some people than money, meaning the value one puts on an item might not be the same for another person, nor meet the market's belief of its value. Lastly, in the long run barterers must understand why they are bartering. Is it to save money, to make money or
to get something of value? Solomon provided these insider tips:
  • Nothing is taboo when it comes to trading. The secret is in finding out what the other person values. If you can obtain or offer that item for less than expected and bring it to a trade, then you have a good chance of walking away with what you want.
  • Some items are one of a kind or close to it. These items have value beyond dollars and cents, at least for the person seeking the item. It's also important to understand that some things will gain value over time as they become novel, rare or collectible, thus taking a short-term loss is sometimes worth it.
  • Being able to read people is key. Some people are ready to dump stuff just to get it off their hands. Others need money, tools or services in a pinch. You can make better deals with people who really need to trade, rather than with people who are trading just for profit. In short, immediacy is helpful.
  • Remember to keep both parties comfortable. According to Shai Barel, an avid barterer and partner at, a contract can keep both parties comfortable and confident. "There needs to be a good contract that breaks down the terms, and both parties should have a good sense of trust in each other," Barel said. "Also, it is best to try to avoid bartering situations where one person's product or service is delivered earlier than the others. This could create unpleasant feelings between the two parties, as well as a lack of motivation to deliver services. In addition, one should avoid bartering for services that don't have set objectives or goals that can't be quantified."
Concerns When Exchanging Goods

There are both theoretical and practical problems in bartering. Practical problems include some of the issues listed above; theoretical issues include non-standardized values, indivisibility and coincidence of want. Non-standardized values can lead to the feeling of being gypped, while indivisibility and coincidence of want are problems when trading one item or service for multiple occurrences of another, according to Kevin Hoult, certified business adviser at the West Virginia University Small Business Development Center. Take for example, trading webpage development for 10 haircuts. How do you quantify tip in your transaction -- and what is the timeline for paying back the service?

From a legal stance, barter deals can go up to the Internal Revenue Service level if things go sour, according to Hoult. "The other monsters hiding under the bed of [bartering] are cash flow and tax consequences," Hoult said. "It is very risky to trade inventory for anything. The cost of replacing inventory and the loss of gross profit from the transaction can result in business owners shoplifting from themselves.

"Tax consequences rear their ugly heads when one of the parties reports what was given up in barter as a business expense. Tax authorities will wonder where the other half of that transaction might be, perhaps resulting in a dreaded letter from the government."

Time Banks Offer a Compromise

Luckily, those who barter for their businesses can get around both the discomfort and tax implications by brokering their deals through a bartering exchange, also known as a time bank. For those looking to barter out of the confides of Craigslist and sites like U-Exchange, time banks provide another source to barter that are especially helpful when a trade necessitates multiple parties.

"Doing one-to-one barters for business owners is extremely difficult and often one side does not receive full value for what they barter or the service they provide," said Bruce Condit, director of public relations at Allegiance Capital Corp. Condit recommends companies avoid tax issues when bartering by using an organized barter exchange. "The main objective of barter is to sell excess time, products or services on barter -- at the same rate you would normally sell them," Condit said. "Then you use the barter dollars to purchase goods and services you would normally pay cash for."

However you choose to barter, whether it be through one of the many swapping sites out there or between just family and friends this holiday season, any reservations you have toward bartering could be inflating your expenses and preventing you from capitalizing on the value others might see in your items that might be going dusty or unused.
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