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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Travis_Bickle who wrote (103453)	2/5/2008 4:15:00 PM
From: ChanceIs	Read Replies (2) \| Respond to of 306849

>>>So they are selling calls on houses ....<<< No. I think that they are throwing free puts into the deal along with the granite counter tops. If you hold a put, as the would be home buyer you want the house price to drop - increases the value of the put. If the builder sold a call, he would want the house price to go up - and my God those boys want those houses prices to go up. Now you could argue - and I would agree - that if they jacked the house price up by the amount of an embedded call premium, then indeed they would have sold a call. There has been nothing but fraud since 2002. The mortgage originators, the homebuilders passing down payments through charities, the packaging of the crap into CDOs, and compensation of appraisers to supply over market valuations. Thsi introduces the topic of appraisers. Do those folks bat both ways?? I bet they do. So you go talk to Pulte, and sign a contract. Then you have an army of appraisers run over the neighborhood and mark everything down by $75K. And you delay closing as long as possible. Most closings are contingent on getting financing. Not getting financing is real easy these days. Then you have your appraisers go around the neighborhood again. Sounds like a great scam to me. See what I mean about desperation??? I think that the builders have exposed their flanks even more. Imagine the litigation over the real market value. Again the longer it runs out in the courts, the lower those values get. If those builders were smart, they would go to Case-Shiller and buy five index puts for every one they give away to the buyers. Of course if they had been doing that in 2005, they wouldn't be having any problems at all. There is a great future for anybody who bothers to learn risk management.