You may not be familiar with the term lock in value equity but it is the perfect solution for home owners who are worried that real estate values will fall. Here we will look at home these contracts work and how they can protect the value of your home.
Lock in value equity is not a new concept; it has been available to high net worth individuals and corporation for years - but is only now being made available to smaller investors and individual retail home owners.
How does it Work?
Lock in value equity does exactly what the name implies - it locks in the value of a home at a set level when the contract is signed.
The level that the equity is locked in at is the price that the homeowner is guaranteed to receive as a minimum - even if the market value of his house declines during the life of the option and is less.
The grantor of the lock in value equity contract gives the homeowner the right to sell their property to the company and the company is bound to buy the property off them for this amount.
The homeowner is therefore protected from falling prices in real estate beyond the lock in value. Of course real estate prices may rise as well however the homeowner doesn't lose out - Why?
Because he has the right to sell at the lock in value but is not obligated to do so and if prices rise (should he choose to sell) he can sell to another buyer at the prevailing market value.
These contracts above all give peace of mind:
They protect against real estate value falls but don't restrict any upside.
There available for a small fee and can protect for up to 10 years. With the real estate market falling and with the possibility values could fall further, these options are more popular than ever.
So if you are worried about the future direction of real estate prices, you may want to consider lock in value equity contracts as a means of protecting yourself and the value of one of your biggest assets - your home.
