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Understanding Future Equity Agreement

IRESE offers a Future Equity Agreement to provide interest-free cash today in exchange for a share in the future equity of the property. Consider these reasons to use this agreement:
  • Unlock the value of your property without having to sell your home, or take out expensive reverse mortgage or a home equity loan
  • Get cash without monthly payments, which you are free to use as you wish - use money for your retirement, fund college education, start a new business or diversify your investment
With Future Equity Agreement, you can unlock the future value of your home today and receive immediate cash with no payments. Let us walk through a specific example.

Property Owner Motivation

As an example, let us take a homeowner who lives in La Jolla, CA and the current value of his or her home is $1 million, derived from the last sale date and sale price of the property.

Further, the homeowner believes that the property value of the home in 5 years will not be above $1.2 million and he is willing to sell some equity above that value.

Homeowner would enter into a Future Equity Agreement to get debt-free cash today.

Future Equity Agreement

Through an IRESE Broker, the homeowner enters into a Future Equity Agreement for a specific term of 5 years, with an minimum property value of $1.2 million and 50% future equity share. Property Owner can get a free quote online. In our example, the homeowner should get $60,321 today, debf-free cash.

Property Owner Payment

In 5 years, the payment is based on an observed value of the property which is determined from publicly available price index data. Learn how property value is derived. If the observed value is below minimum value of $1.2 million, the agreement ends and the homeowner owns nothing. And in case of the observed value above $1.2m the homeowner pays the difference. In our example, if the property value is $1.4 million, the payoff is $0.1 million ($1.4 less $1.2 million at 50% equity share). Note, that as a property owner you can only share up to 50% of the future equity appreciation, thus you never can owe anymore then you gain in appreciation.

A Future Equity Agreement provide property owner with debt-free cash today, in exchange for something which might or might not happens in the future,

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