Equities Options

Equities Options for Real Estate

Real Estate historically has different types of valuation methods: appraisal value, market value, judicial value, forced sale-cash value, forced sale-terms value. Now, there is option value.

Property Owners might not realize that your home is actually worth more than you think it is. Most people have a notion that their home’s value is only what someone will pay you for it. And this is how most valuers come up with a figure on which banks lend. However there is one additional item which has value for all real estate. That item is its option value.  

An option value is the amount of money somebody is willing to give a property owner for the right to purchase the property owner’s real estate at some time in the future ( without any obligation to proceed with the purchase).

Once you know the option value of your home, you are have any number of options to do what you like with that option. Perhaps there are some real estate owners who might be interested in realizing some of the additional value of their properties by getting cash out of the option value of their home and other property assets? This can be done by selling an option for the sale of your home to an investor (the optionee) who buys your option. In selling such an option say on your home you are the optionor – and are writing a Call Option – which gives the option holder the right to purchase your home subject to the terms set out in the option contract.

The best part for a property owner is that selling an option on your real estate does not mean that they must transfer title to a new owner and walk away immediately. An option sale simply means that the option buyer has the right but not the obligation to purchase your property at some point in the future at whatever terms the property owner and the option buyer agree to. The property owner gets immediate cash (option premium) for selling the option to the option investor. The very best part is the money is tax free to the recipient until either the property is sold – that is the option is exercised, or until the option expires – that is the day after which the option can no longer be exercised.