If we make bad choices we pay a price. As with real agency, using it correctly takes proper understanding. This article is in two parts. The first part introduces a complex but important financial tool. Next month's part will deal with ways ordinary investors can take advantage of options.
Most people are familiar with the concept of an option when it comes to real estate.
Let's say you have coveted your neighbor's cute little sixty room cottage for years. Finally, she agrees to sell it to you. But first you have to make sure you can get the money out of your wife's piggy bank, and this may take you a month. You may give your neighbor an earnest money down payment to hold the property at that price for you for a period of time, say one month. This is like getting an option to buy the cottage.