Toronto Real Estate Question
How much would you pay for an option to buy a 3 bedroom house in Toronto for $700,000 by 2020?
Data that should be taken into consideration: Current price of 3 bedroom house in Toronto = $640,000
House prices have risen 10%/ year for the past 12 years
Remember: You are being asked what you would buy the "option" for? You still have to buy the house for $700,000 if you want to. If by 2020 houses are going for under $700,000 (let's say $$680,000), you will not "exercise" the option (buy the house for $700,000) because you will go buy the house for $680,000. If by 2020 houses are going for over $700,000, you will "exercise" the option (buy the house for $700,000).
Between now and 2020 the price of houses will rise/fall which will make the option price rise and fall.
Go to our online discussion "Real Estate Option" and share what you would pay.
House prices have risen 10%/ year for the past 12 years
Remember: You are being asked what you would buy the "option" for? You still have to buy the house for $700,000 if you want to. If by 2020 houses are going for under $700,000 (let's say $$680,000), you will not "exercise" the option (buy the house for $700,000) because you will go buy the house for $680,000. If by 2020 houses are going for over $700,000, you will "exercise" the option (buy the house for $700,000).
Between now and 2020 the price of houses will rise/fall which will make the option price rise and fall.
Go to our online discussion "Real Estate Option" and share what you would pay.