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January 13, 2008 at 10:22 PM in reply to: Carmel Valley Pardee DH,Saratoga,CarriageRun Holding Value #135513January 13, 2008 at 10:22 PM in reply to: Carmel Valley Pardee DH,Saratoga,CarriageRun Holding Value #135507
not-so-average-joe
ParticipantSDR,
I’m almost certain the house sdhome described is
I don’t believe the 70k rebate story either, but it won’t hurt to dig a little further.
January 13, 2008 at 10:22 PM in reply to: Carmel Valley Pardee DH,Saratoga,CarriageRun Holding Value #135314ParticipantSDR,
I’m almost certain the house sdhome described is
I don’t believe the 70k rebate story either, but it won’t hurt to dig a little further.
January 13, 2008 at 3:14 PM in reply to: Carmel Valley Pardee DH,Saratoga,CarriageRun Holding Value #135416ParticipantThe sold prices from builders are not trustable sometimes. I have a friend who just bought a 2600sf house from a small builder at carmel valley with 50k discount off the lower range. However, the builder required to set the transaction price at 20k above the lower range, with a 70k cash back to my friend…
That’s an interesting story. That builder had a really
hard time selling the unit and when I saw the closing price,
I was a little surprised to see the number over the lower range. So 855k it was.January 13, 2008 at 3:14 PM in reply to: Carmel Valley Pardee DH,Saratoga,CarriageRun Holding Value #135163ParticipantThe sold prices from builders are not trustable sometimes. I have a friend who just bought a 2600sf house from a small builder at carmel valley with 50k discount off the lower range. However, the builder required to set the transaction price at 20k above the lower range, with a 70k cash back to my friend…
That’s an interesting story. That builder had a really
hard time selling the unit and when I saw the closing price,
I was a little surprised to see the number over the lower range. So 855k it was.January 13, 2008 at 3:14 PM in reply to: Carmel Valley Pardee DH,Saratoga,CarriageRun Holding Value #135358ParticipantThe sold prices from builders are not trustable sometimes. I have a friend who just bought a 2600sf house from a small builder at carmel valley with 50k discount off the lower range. However, the builder required to set the transaction price at 20k above the lower range, with a 70k cash back to my friend…
That’s an interesting story. That builder had a really
hard time selling the unit and when I saw the closing price,
I was a little surprised to see the number over the lower range. So 855k it was.January 13, 2008 at 3:14 PM in reply to: Carmel Valley Pardee DH,Saratoga,CarriageRun Holding Value #135363ParticipantThe sold prices from builders are not trustable sometimes. I have a friend who just bought a 2600sf house from a small builder at carmel valley with 50k discount off the lower range. However, the builder required to set the transaction price at 20k above the lower range, with a 70k cash back to my friend…
That’s an interesting story. That builder had a really
hard time selling the unit and when I saw the closing price,
I was a little surprised to see the number over the lower range. So 855k it was.January 13, 2008 at 3:14 PM in reply to: Carmel Valley Pardee DH,Saratoga,CarriageRun Holding Value #135459ParticipantThe sold prices from builders are not trustable sometimes. I have a friend who just bought a 2600sf house from a small builder at carmel valley with 50k discount off the lower range. However, the builder required to set the transaction price at 20k above the lower range, with a 70k cash back to my friend…
That’s an interesting story. That builder had a really
hard time selling the unit and when I saw the closing price,
I was a little surprised to see the number over the lower range. So 855k it was.ParticipantThank you all for many insightful comments.
– FormerSanDiegan: I agree that vanilla futures can at best guarantee 17% decline, even ignoring fees, etc. Of course, this problem would be somewhat solved if there were a bullish bozo who is willing to sell it high.
– Duck: CME housing future options are pit traded and my broker (IB) doesn’t seem to support it, so I guess average Joe is not supposed to deal with this. Also getting a “fair” price could be a headache, although we never ask that question for everyday insurance products as far as they are “affordable”.
REX & Co. is really interesting — they are in a sense taking some share of your house and, even better, that share comes out as cash. As XBoxBoy mentioned, we need to hold the house for 5 years, but on a flip side, after 5 years we can settle the deal with them without an actual sale — just getting an “independent” appraisal will do the job.
As a quick calculation without tax implications, suppose I get into the REX agreement for a 1 million house with 50% profit/loss sharing. They will give me 140k according to the sample calculation on their website, which will give me around 40k over 5 years risk-free.
If the house value tanks down 20% in 5 years (rough interpolation from the housing futures prices), then the net loss becomes 200k * 50% (REX agreement) – 40k (interests) = 60k. Thus 2/3 of the loss is hedged away.
I believe a better strategy could be possible. Also, if I don’t have to sell within 5 years and if the market stays flat for a couple years, I can hedge more by just waiting, thanks to interests accrued on that 140k.
So what’s the catch? Obviously I should read fine prints, but the general approach looks very promising to me, who just wants to raise the family without losing big bucks.
ParticipantThank you all for many insightful comments.
– FormerSanDiegan: I agree that vanilla futures can at best guarantee 17% decline, even ignoring fees, etc. Of course, this problem would be somewhat solved if there were a bullish bozo who is willing to sell it high.
– Duck: CME housing future options are pit traded and my broker (IB) doesn’t seem to support it, so I guess average Joe is not supposed to deal with this. Also getting a “fair” price could be a headache, although we never ask that question for everyday insurance products as far as they are “affordable”.
REX & Co. is really interesting — they are in a sense taking some share of your house and, even better, that share comes out as cash. As XBoxBoy mentioned, we need to hold the house for 5 years, but on a flip side, after 5 years we can settle the deal with them without an actual sale — just getting an “independent” appraisal will do the job.
As a quick calculation without tax implications, suppose I get into the REX agreement for a 1 million house with 50% profit/loss sharing. They will give me 140k according to the sample calculation on their website, which will give me around 40k over 5 years risk-free.
If the house value tanks down 20% in 5 years (rough interpolation from the housing futures prices), then the net loss becomes 200k * 50% (REX agreement) – 40k (interests) = 60k. Thus 2/3 of the loss is hedged away.
I believe a better strategy could be possible. Also, if I don’t have to sell within 5 years and if the market stays flat for a couple years, I can hedge more by just waiting, thanks to interests accrued on that 140k.
So what’s the catch? Obviously I should read fine prints, but the general approach looks very promising to me, who just wants to raise the family without losing big bucks.
ParticipantThank you all for many insightful comments.
– FormerSanDiegan: I agree that vanilla futures can at best guarantee 17% decline, even ignoring fees, etc. Of course, this problem would be somewhat solved if there were a bullish bozo who is willing to sell it high.
– Duck: CME housing future options are pit traded and my broker (IB) doesn’t seem to support it, so I guess average Joe is not supposed to deal with this. Also getting a “fair” price could be a headache, although we never ask that question for everyday insurance products as far as they are “affordable”.
REX & Co. is really interesting — they are in a sense taking some share of your house and, even better, that share comes out as cash. As XBoxBoy mentioned, we need to hold the house for 5 years, but on a flip side, after 5 years we can settle the deal with them without an actual sale — just getting an “independent” appraisal will do the job.
As a quick calculation without tax implications, suppose I get into the REX agreement for a 1 million house with 50% profit/loss sharing. They will give me 140k according to the sample calculation on their website, which will give me around 40k over 5 years risk-free.
If the house value tanks down 20% in 5 years (rough interpolation from the housing futures prices), then the net loss becomes 200k * 50% (REX agreement) – 40k (interests) = 60k. Thus 2/3 of the loss is hedged away.
I believe a better strategy could be possible. Also, if I don’t have to sell within 5 years and if the market stays flat for a couple years, I can hedge more by just waiting, thanks to interests accrued on that 140k.
So what’s the catch? Obviously I should read fine prints, but the general approach looks very promising to me, who just wants to raise the family without losing big bucks.
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