Carol Ornelas always wanted to live in a beautiful house on a hill in Malibu. Five years ago she bought a mountain lot for $42,500 and began planning her dream home.
But there was a catch. Even with the biggest loan they could manage, Ornelas and her husband, Willie, were still more than $100,000 short of their hilltop fantasy.
That didn't stop her.
Now, as Ornelas surveys her recently completed Spanish-style home, with its spiral staircase, soaring ceilings and sweeping ocean view, she breaks into a wide smile.
"I love to trade," Ornelas, 39, said.
More than $100,000 in labor and materials for the three-bedroom, two-story house was bartered. The architect, plumber and carpenter received no cash. Neither did the companies who sold Ornelas the floor tile, mirrors or carpeting.
Instead, they all earned "credits" from the barter company that Ornelas owns, Malibu Business & Professional Exchange. Then they used their credits to buy what they wanted from the exchange's 300 members, who offer works of art, hotel rooms, dental work, rugs, flowers, car washes, tree trimming, restaurant meals--even advertising space in magazines.
Owning a trade exchange certainly gives Ornelas an advantage, but bartering home renovations is an option available to anyone who's got something to trade.
"Basically, anybody could do this if they had enough credits," Ornelas said. "All the people I used need new business. They've spent all the credits that they earned."
The ancient art of barter, which predates the invention of money, has come a long way from the days when the farmer traded his eggs for a loaf of bread. Now barter--or, as the professionals say, spending done "on trade"--is big business. U.S. exchanges traded $750 million worth of goods and services in 1990.
Carol Ornelas, too, has come a long way. Twelve years ago she was looking to quit her job selling real estate when she stumbled onto the world of barter. For the first two years she knocked on doors, signing up a florist here, a doctor there.
Now Ornelas trades so successfully that she collects her fees--$10 a month and 15% of each transaction--entirely in trade. "I don't have any problem using my trade (credits)," she said. "And I sell my trade at 50 cents on the dollar if I need cash for the people who want half-cash, half-trade."
Electrician Dusty Peak installed the wiring in Ornelas' house, taking one-third of his pay in trade. In return, he used his credits to hire the exchange's bookkeeper for a year of accounting and tax work.
After 10 years of trading, Peak has already taken advantage of many of the club's services. "Everybody wants to use me," he said. "At this point, before I take a job, I make sure there's something on the exchange I need and can use within the next year.
"One year, I got a cabin (for the weekend) up in Mammoth and took a bunch of friends," Peak added. "They paid me in cash for their share, so it worked out great."
While it's hard to imagine that a reliable plumber would perform top-quality work on your house for weeks without receiving any cash, Ornelas says trade workers are actually more reliable than their dollar-earning counterparts.
Where a plumber working for cash might get half his money up front, there's no payday for the trading plumber until the work is completed. "I'm not going to put (any) credits in their account until the job is done and you're satisfied," Ornelas said. "So you're covered better than if you were a cash customer.
"You do have to have patience, though--because if an electrician is coming to your house and doing a $5,000 trade job for you and he gets a $10,000 cash job, you're going to have to wait."
Despite such delays, Ornelas is so happy with the way her traded home building turned out, she and husband Willie, a professional drummer, are planning to do more.
"We're adding 1,000 square feet down below the first floor, with an office and a soundproofed studio, and I've got people lined up to do all the work on trade," she said. "We're going to build a lap pool, and the designers are doing that on trade--they want some color printing for their advertising campaign."
In her search for the goods and services she wants, Ornelas makes frequent use of other barter exchanges, setting up trade credit swaps between trading companies. She often calls Mark Tracy, owner of American Commerce Exchange in North Hollywood. For an initial $300 fee, Tracy starts off new members with $500 in trade credits.
Last fall, as the economy slowed, business at both barter companies picked up. Tracy said, "Since Oct. 1, we're up 20%, and by all indications it will continue through 1991."
Both Malibu Business & Professional Exchange and ACX belong to the National Assn. of Trade Exchanges (see box). Said NATE President Tom McDowell, "When things get bad, our business tends to increase, because people have excess time or inventory and they're looking for customers. And trade exchanges have customers."