When John Richards and Mary Beth Hess walked by the house on Swann Street near the District's Dupont Circle they "took one look and felt like we had to have it," Richards said. They have the home now, but what they went through to get it shows how much patience and creativity it takes to buy and sell property these days.

Richards and Hess and the couple who owned the Swann Street house, Janet Bennett and James B. Kelly, spent six frustrating months trying to sell their homes in Washington's slow real estate market and finally bought each others' properties.

Bennett and Kelly, owners of the Swann Street house, bought the condominium Richards and Hess had been unable to sell, paying about $160,000. With help from these proceeds, Hess and Richards then bought the house for nearly $500,000. Bennett and Kelly, who now live and work in Brussels, are renting out the Washington condo.

A swap like this is one of the more unusual deals made during the past year. But the majority of real estate transactions now involve terms or circumstances not found in the fast-moving market that Washington had in the latter part of the 1980s.

Contracts making a purchase contingent on the sale of the prospective buyer's current home are widely used now. Richards and Hess, like most purchasers, had to sell the house they already owned before they could buy another one. They offered Bennett and Kelly a contingency contract, which would not become binding until they sold their condominium. When the only serious prospect decided not to buy the condo, the two couples, both eager to sell, made their unusual deal.

The Washington area is suffering from a nearly year-long slide in home sales and housing construction, as is much of the northeastern and southern United States. Nationally, new home sales have dropped 22 percent from the level of a year ago and sales of existing homes are down 13.5 percent, the Federal National Mortgage Association, reported recently.

Chief economist David W. Berson said the mortgage association, which is also known as Fannie Mae, did not have sales figures by regions of the country. But he said prices in the Washington area "rose so rapidly over the last five years that incomes could not keep pace," contributing to a downturn in home sales and prices here.

Fannie Mae economists recently analyzed home prices in the Washington area. They used last June's median price of $176,000, the level at which half the houses cost more and half cost less, and found that prices above the median were declining and prices below the median were going up, he said.

The area economy "has slowed a great deal," Berson said. "The recovery in the housing market will depend on recovery in the overall economy."

In the meantime, "there are lots of creative things going on right now" in home sales, said Washington broker Ricki Gerger, a vice president and sales manager for Prudential Preferred Properties.

Real estate professionals and sellers typically are reluctant to accept contracts that do not become binding until the prospective buyer's home is sold. But now "most sellers are taking contingency contracts where before they wouldn't even think about it," said Ray Chappell, chairman and chief executive of Prudential Preferred Properties. His sales staff began reporting an increase in such contracts a year ago and the pace has picked up within the last six months. Now between 25 and 30 percent of his company's sales involve contingent agreements, he said.

"With so many houses on the market, it behooves any seller to seriously consider a contingency contract if the people are serious buyers," said Mary Jane Comegys, a sales associate with Shannon & Luchs Realtors in Northern Virginia. "Ideally you would not like a contingency contract, but ideally you wouldn't have a market like this."

These agreements nearly always contain what agents call a kick-out clause, usually for 48 hours or 72 hours, allowing the seller to accept another offer unless the holder of the contingency contract buys the house within that period.

It is not unusual for offers to stack up, with two or three transactions depending on the sale of the house at the bottom, according to buyers, sellers and sales agents.

Prospective purchasers who sign a contingency contract usually have from two to four months to sell their own houses but occasionally they get even more time. In one of the longest extensions reported, the owner of a $550,000 house near Dupont Circle gave the purchaser until next June to sell his home and complete the sale, said Jeffrey Brier, a real estate associate with Prudential Preferred Properties in the District.

Sometimes, however, sellers aren't so patient.

Sam Fulwood and his wife, Cynthia Bell, moved to Washington after putting their Atlanta house up for sale in October 1989. They expected to have a buyer within a few months and they found a new house they liked in Accokeek in Prince George's County. The couple signed a contract with a builder contingent on that sale.

Last winter "the bottom fell out" of the Atlanta real estate market and their suburban home there is still on the market, "shuttered and empty," Bell said. After three months, the Accokeek builder would not extend the contract and the couple now lives in a Crystal City apartment.

The "biggest problem" with contingency agreements, "is that people who draft contingencies don't play them all the way out," said Benny L. Kass, a D.C. real estate attorney and Washington Post real estate columnist. For example, if a 90-day contract says a purchase is contingent on the sale of a house, what happens on the 90th day if the house has not been sold? Kass said answers to such questions often are not spelled out in contracts.

"You've got to do the 'what if?' test," he said. And then "you must carefully think through the ramifications and spell them out in the clearest possible English" in a contract, making sure it is clear what happens if the prospective buyer's house has not been sold.

"People sometimes get themselves in deep trouble" when using contingencies, said Grant Griffith, an associate broker with Dale Denton Real Estate Inc. "Overaggressive" agents can push buyers into agreements without adequately explaining the document's contents, he said. "It only takes one word or phrase" to make a contract invalid and a seller who agrees to such a contract can be forced to sell his home even though he gets a better offer, he said.

Such contracts also may keep away other buyers.

Many agents say, "I don't want to fool with this," when they see that a house listed for sale has a contingency contract on it, even one with a kick-out clause, Griffith said.

Although contingencies are sometimes necessary in today's real estate market, Griffith said he would discourage people from signing them, even with the kick-out clause, whenever possible.

On the plus side, a house with a contingency contract on it is a signal, in the minds of some agents and house hunters, that it must be a good buy, in the view of Kathie Eaton, a Shannon & Luchs Realtors sales associate in Vienna, and several other agents and brokers.

But like many of them, Eaton said she believes a contract conditional on another sale "slows the traffic down," with fewer agents and prospective buyers showing interest.

Harley E. Rouda of Columbus, Ohio, president of the National Association of Realtors, agreed that this may be the "biggest disadvantage" of contingency contracts. Because many agents will not take prospective buyers to a home under a contingency contract, "the house is in effect off market for 30 days" or for the length of the contract.

Another problem, Rouda said, is that a seller who accepts a contingency contract "mentally has already sold the house and might not keep the home in as good a shape as he should" for showing to other prospective buyers in case the sale falls through.

Houses that have contingency contracts on them, but are still on the market are separated from other homes in the computerized listing of homes for sale in the District, a disadvantage to the seller, said Barbara Zuckerman, an agent with Prudential Preferred Properties.

A disadvantage for the buyer is that the home is likely to cost more.

Sellers who accept contingency contracts are reluctant to negotiate the price, said Peter Clute, who is with the Georgetown office of Pardoe Real Estate. He described a recent sale in which an owner asked $425,000 for his home and during negotiations with a prospective buyer was willing to cut the price by only $5,000. If the deal had not been contingent on first selling a house, the buyer could have gotten the property for $395,000, Clute said.

Long Signature Homes chairman Gary Garczynski said his company sometimes accepts contingency contracts from buyers, but "they are screened very carefully" and must have kick-out clauses. Garczynski said he wants to be sure the buyer has put a "realistic" price on the home he must sell before buying from Long Signature.

Despite the shortcomings of contingency sales clauses, they are being used widely. Real estate agent Zuckerman said that sellers with all price houses are now more willing than ever to take contingency contracts "because they have to."