A Twinkle In My Eye
Deposit on a house being built.
Posted on Sat, 25 Aug 07 at 14:42 by Chris Matts into Examples of Embedded Options
If you would like to buy a house in an area but are concerned that prices will fall, you could put a deposit on a house in a new development that allows you to buy the house a year or two later.
e.g. Place a 10% deposit on a E500K house costing E50K.
If the house value goes up to E700K, buy the house at a E200K profit.
If the house drops in value by more than E50K, walk away from the deposit and buy the house in the open market.
