CA2578451A1 - A system and method for insuring real estate transactions - Google Patents
A system and method for insuring real estate transactions Download PDFInfo
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- CA2578451A1 CA2578451A1 CA 2578451 CA2578451A CA2578451A1 CA 2578451 A1 CA2578451 A1 CA 2578451A1 CA 2578451 CA2578451 CA 2578451 CA 2578451 A CA2578451 A CA 2578451A CA 2578451 A1 CA2578451 A1 CA 2578451A1
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- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q40/00—Finance; Insurance; Tax strategies; Processing of corporate or income taxes
- G06Q40/08—Insurance
Abstract
A method of reducing the risk to a Vendor of a First House that the Vendor of the First House' will have to pay the Monthly Carrying Costs associated with the First House in the event that the First House is not sold within an acceptable period of time, comprising the steps of calculating the Monthly Carrying Costs associated with the First House, establishing a Minimum Acceptable Price for the sale of the First House, calculating the likelihood that the First House will not be sold at or above the Minimum Acceptable Price during the acceptable period of time and calculating the likely length of time required to sell the First House at or above the Minimum Acceptable Price, calculating the potential claim exposure of having to pay the Monthly Carrying Costs after the acceptable period of time until the First House is sold at or above the Minimum Acceptable Price, calculating a premium to be charged to the Vendor, the Vendor entering into an agreement with a Third Party, wherein the Vendor agrees to pay the premium, and the Third Party agrees to pay the Monthly Carrying Costs associated with the First House in the event that First House is not sold within the acceptable period of time and until such time as the First House is sold at or above the Minimum Acceptable Price.
Description
A SYSTEM AND METHOD FOR INSURING REAL ESTATE TRANSACTIONS
FIELD OF THE INVENTION
The present invention relates to an insurance-type product and methodology, and more particularly relates to an insurance-type product and methodology in relation to one or more real estate transactions.
BACKGROUND OF THE INVENTION
It is a common practice for individuals to rely on the proceeds from the sale of one house or real estate property (hereinafter a "First House") as a major source of funding toward the purchase of another house or real estate property (hereinafter a "Second House"), and, to affect this strategy, make an offer on the Second House which is conditional on the sale of the First House. In a typical real estate transaction, this type of offer may be open for a fixed period of time, such as, for example, 90 days, or less, it being understood that a wide variety of different arrangements can be devised. In such a case, in the event that the First House is not sold within the fixed period of time, the vendor of the First House can either remove the condition and proceed with the purchase of the Second House despite not having sold the First House, or alternatively, not remove the condition and permit the offer to purchase the Second House expire.
Although a conditional offer may be better than no offer all, nevertheless, there are drawbacks presented by such a conditional offer. For example, as the vendor of the Second House does not know, with certainty, that the First House will sell, and there is no assurance that the vendor of the First House will have the funds necessary to proceed with the purchase of the Second House, in the event that the conditional offer expires (the condition having not been removed by the vendor of the First House), the vendor of the Second House cannot proceed with the sale of the Second House, and must start the cycle again of seeking out another opportunity to sell the Second House.
Furthermore, the purchaser of the Second House does not know with certainty whether or not the Page 1 of 10 Second House can be purchased, or whether or not the condition can be removed, in the event that the First House is not sold during the fixed period of time in which the conditional offer is open. While the purchaser of the Second House can, of course, remove the condition at any time, and possibly, with the aid of bridge financing, proceed with the purchase of the Second House, if the purchaser's First House does not sell quickly, the purchaser of the Second House faces the risk of potentially owning two properties (which typically would require the individual to make two sets of mortgage payments, insurance payments, taxes, maintenance and other expenses on both houses), and may have great difficulty or be unable to carry both houses, putting the purchaser at risk of having to sell one of the properties at a loss or otherwise making alternative arrangements for financing.
It is desirable to have access to protection against the uncertainties of the marketplace, particularly as it relates to relatively expensive items such as homes and real estate and the length of time that may be necessary to affect the sale of a particular property, and to be able to deal with some of the risks associated with a single or multiple real estate transactions in a convenient, cost effective and simple manner.
SUMMARY OF THE INVENTION
Accordingly, one object of the present invention is to provide a method for reducing, mitigating or substantially eliminating some of the financial risks associated with the possibility of not being able to sell a house or real estate at or near fair market value within a predefined period of time.
It is another object of the present invention to provide a method for paying or providing for the payment of certain expenses relating to a house or real estate which is for sale and which has not yet been sold.
According to one aspect of the present invention, there is provided a method of reducing the risk to a Vendor of a First House that the Vendor of the First House' will have to pay the Monthly Carrying Costs associated with the First House in the event that the First House is not sold within Page 2 of 10 an acceptable period of time, comprising the steps of, calculating the Monthly Carrying Costs associated with the First House, establishing a Minimum Acceptable Price for the sale of the First House, calculating the likelihood that the First House will not be sold at or above the Minimum Acceptable Price during the acceptable period of time and calculating the likely length of time required to sell the First House at or above the Minimum Acceptable Price, calculating the potential claim exposure of having to pay the Monthly Carrying Costs after the acceptable period of time until the First House is sold at or above the Minimum Acceptable Price, calculating a premium to be charged to the Vendor, the Vendor entering into an agreement with a Third Party, wherein the Vendor agrees to pay the premium, and the Third Party agrees to pay the Monthly Carrying Costs associated with the First House in the event that First House is not sold within the acceptable period of time and until such time as the First House is sold at or above the Minimum Acceptable Price.
Advantageously, the present invention provides a method for reducing, mitigating or substantially eliminating some of the financial risks associated with the possibility of not being able to sell a house or real estate at or near fair market value within a predefined period of time and provides a method for paying or providing for the payment of certain expenses relating to a house or real estate which is for sale and which has not yet been sold.
BRIEF DESCRIPTION OF THE DRAWINGS
A preferred embodiment of the present invention is described below with reference to the accompanying drawings, in which:
Figure 1 is a table in which hypothetical risk assessment data is provided for the Elimination Period and thereafter, in respect of houses in the Halifax Nova Scotia marketplace within a predetermined price range.
Figure 2 is a flow chart demonstrating the methodology of one embodiment of the present invention.
Page 3 of 10 DESCRIPTION OF THE PREFERRED EMBODIMENT
In the preferred embodiment of the present invention, an insurance-type product and methodology is provided which transfers some or all of the risk that a First House will not be sold within a particular or predetermined length of time, the risk being transferred in whole or in part from the Vendor (as that term is more fully described herein) of that First House, to a Third Party (as that term is more fully described herein).
In the preferred embodiment, where the vendor of a First House (referred to herein as the "Vendor") has a mortgage on the First House and wishes to proceed with the purchase of a Second House (this scenario being referred to herein as the "Type A"
scenario), while at the same time reducing or mitigating the financial risk of owning and having to financially support both the First House and the Second House should the sale of the First House occur subsequent to the purchase of the Second House, a method of reducing or mitigating the financial risk is provided to the Vendor.
In alternative embodiments of the present invention, it is understood that the present invention may be utilized where the Vendor of the First House has a mortgage on the First House and has no intention of purchasing a Second House (this scenario being referred to herein as the "Type B" scenario), but nevertheless wishes to reduce, mitigate or eliminate the risk of having the First House remain on the market for an extended period of time.
In a further alternative embodiment of the present invention, it is understood that the present invention may be utilized where the Vendor has no mortgage on the First House, but nevertheless wishes to use the proceeds from the sale of the First House towards the purchase of the Second House and wishes to reduce, mitigate or eliminate the risk of having to take on a new expense to pay the financing and other costs of the Second House should the First House not sell for an extended period of time (this scenario being referred to herein as the "Type C" scenario).
With reference generally to Figure 2 which provides a generalized description of one embodiment of the methodology of the present invention, where the Vendor of a First House Page 4 of 10 wishes to sell the First House and, in the case of either a Type A, Type B or Type C scenario, upon determining that there is a possibility that the First House will not have been sold during a predetermined or determinable or acceptable period of time and the Vendor determining that it is desirous to reduce, mitigate or eliminate the risk of having the First House remain on the market for an indeterminate or extended period of time, a third party (hereinafter the "Third Party") collects certain information as more fully described herein, and enters into a policy agreement with the Vendor as more fully described herein. In one embodiment, the Third Party is an insurance company or an entity acting on behalf of, or a direct agent of an insurance company, including for example (unless prohibited by law or regulation), Realtors, brokers, and others.
In the preferred embodiment, the Vendor has listed the First House through a real estate agent, and preferably through one having access to a service such as the MLS
(Multiple Listing Service) system to give broad exposure to the house in the real estate market, it being understood that while this is desirable, in alternative embodiments of the present invention, the Vendor may be selling the First House using various different techniques, including selling it personally without the assistance of a real estate agent, it being understood that in such a scenario, the agreement with the Third Party would be varied to take this into account.
On behalf of the Third Party, in the preferred embodiment, details of the First House and the transaction relating to the First House are determined and recorded, such as, but not limited to:
1. the Vendor's name, 2. the address of the property for sale, 3. the appraised value of the First House (on behalf of the Third Party, the First House is or has been recently appraised, in the preferred embodiment, by a professional appraiser, to determine an accurate estimate of the current value of the First House), 4. the initial listing price (in the preferred embodiment, as to be agreed between the Vendor and the Third Party, the asking or initial listing price of the First House will not exceed a fixed percentage over the appraised value of the First House, which in a preferred embodiment, is no greater than 105%, it being understood that a range of percentages may be considered, depending upon such factors as the local marketplace for houses, the Page 5 of 10 willingness of prospective purchasers to purchase houses in the marketplace at, near or above the asking or listing price, and other factors known to a person skilled in the art), 5. the initial listing date and the duration of the listing, 6. the current Monthly Carrying Costs, including, for example, in the case of the Type A and Type B scenarios, the monthly mortgage costs, plus in the case of Type A, Type B and Type C scenarios, the taxes, insurance, utilities payments, maintenance payments and any other payments which may be the subject of an agreement with the Third Party;
FIELD OF THE INVENTION
The present invention relates to an insurance-type product and methodology, and more particularly relates to an insurance-type product and methodology in relation to one or more real estate transactions.
BACKGROUND OF THE INVENTION
It is a common practice for individuals to rely on the proceeds from the sale of one house or real estate property (hereinafter a "First House") as a major source of funding toward the purchase of another house or real estate property (hereinafter a "Second House"), and, to affect this strategy, make an offer on the Second House which is conditional on the sale of the First House. In a typical real estate transaction, this type of offer may be open for a fixed period of time, such as, for example, 90 days, or less, it being understood that a wide variety of different arrangements can be devised. In such a case, in the event that the First House is not sold within the fixed period of time, the vendor of the First House can either remove the condition and proceed with the purchase of the Second House despite not having sold the First House, or alternatively, not remove the condition and permit the offer to purchase the Second House expire.
Although a conditional offer may be better than no offer all, nevertheless, there are drawbacks presented by such a conditional offer. For example, as the vendor of the Second House does not know, with certainty, that the First House will sell, and there is no assurance that the vendor of the First House will have the funds necessary to proceed with the purchase of the Second House, in the event that the conditional offer expires (the condition having not been removed by the vendor of the First House), the vendor of the Second House cannot proceed with the sale of the Second House, and must start the cycle again of seeking out another opportunity to sell the Second House.
Furthermore, the purchaser of the Second House does not know with certainty whether or not the Page 1 of 10 Second House can be purchased, or whether or not the condition can be removed, in the event that the First House is not sold during the fixed period of time in which the conditional offer is open. While the purchaser of the Second House can, of course, remove the condition at any time, and possibly, with the aid of bridge financing, proceed with the purchase of the Second House, if the purchaser's First House does not sell quickly, the purchaser of the Second House faces the risk of potentially owning two properties (which typically would require the individual to make two sets of mortgage payments, insurance payments, taxes, maintenance and other expenses on both houses), and may have great difficulty or be unable to carry both houses, putting the purchaser at risk of having to sell one of the properties at a loss or otherwise making alternative arrangements for financing.
It is desirable to have access to protection against the uncertainties of the marketplace, particularly as it relates to relatively expensive items such as homes and real estate and the length of time that may be necessary to affect the sale of a particular property, and to be able to deal with some of the risks associated with a single or multiple real estate transactions in a convenient, cost effective and simple manner.
SUMMARY OF THE INVENTION
Accordingly, one object of the present invention is to provide a method for reducing, mitigating or substantially eliminating some of the financial risks associated with the possibility of not being able to sell a house or real estate at or near fair market value within a predefined period of time.
It is another object of the present invention to provide a method for paying or providing for the payment of certain expenses relating to a house or real estate which is for sale and which has not yet been sold.
According to one aspect of the present invention, there is provided a method of reducing the risk to a Vendor of a First House that the Vendor of the First House' will have to pay the Monthly Carrying Costs associated with the First House in the event that the First House is not sold within Page 2 of 10 an acceptable period of time, comprising the steps of, calculating the Monthly Carrying Costs associated with the First House, establishing a Minimum Acceptable Price for the sale of the First House, calculating the likelihood that the First House will not be sold at or above the Minimum Acceptable Price during the acceptable period of time and calculating the likely length of time required to sell the First House at or above the Minimum Acceptable Price, calculating the potential claim exposure of having to pay the Monthly Carrying Costs after the acceptable period of time until the First House is sold at or above the Minimum Acceptable Price, calculating a premium to be charged to the Vendor, the Vendor entering into an agreement with a Third Party, wherein the Vendor agrees to pay the premium, and the Third Party agrees to pay the Monthly Carrying Costs associated with the First House in the event that First House is not sold within the acceptable period of time and until such time as the First House is sold at or above the Minimum Acceptable Price.
Advantageously, the present invention provides a method for reducing, mitigating or substantially eliminating some of the financial risks associated with the possibility of not being able to sell a house or real estate at or near fair market value within a predefined period of time and provides a method for paying or providing for the payment of certain expenses relating to a house or real estate which is for sale and which has not yet been sold.
BRIEF DESCRIPTION OF THE DRAWINGS
A preferred embodiment of the present invention is described below with reference to the accompanying drawings, in which:
Figure 1 is a table in which hypothetical risk assessment data is provided for the Elimination Period and thereafter, in respect of houses in the Halifax Nova Scotia marketplace within a predetermined price range.
Figure 2 is a flow chart demonstrating the methodology of one embodiment of the present invention.
Page 3 of 10 DESCRIPTION OF THE PREFERRED EMBODIMENT
In the preferred embodiment of the present invention, an insurance-type product and methodology is provided which transfers some or all of the risk that a First House will not be sold within a particular or predetermined length of time, the risk being transferred in whole or in part from the Vendor (as that term is more fully described herein) of that First House, to a Third Party (as that term is more fully described herein).
In the preferred embodiment, where the vendor of a First House (referred to herein as the "Vendor") has a mortgage on the First House and wishes to proceed with the purchase of a Second House (this scenario being referred to herein as the "Type A"
scenario), while at the same time reducing or mitigating the financial risk of owning and having to financially support both the First House and the Second House should the sale of the First House occur subsequent to the purchase of the Second House, a method of reducing or mitigating the financial risk is provided to the Vendor.
In alternative embodiments of the present invention, it is understood that the present invention may be utilized where the Vendor of the First House has a mortgage on the First House and has no intention of purchasing a Second House (this scenario being referred to herein as the "Type B" scenario), but nevertheless wishes to reduce, mitigate or eliminate the risk of having the First House remain on the market for an extended period of time.
In a further alternative embodiment of the present invention, it is understood that the present invention may be utilized where the Vendor has no mortgage on the First House, but nevertheless wishes to use the proceeds from the sale of the First House towards the purchase of the Second House and wishes to reduce, mitigate or eliminate the risk of having to take on a new expense to pay the financing and other costs of the Second House should the First House not sell for an extended period of time (this scenario being referred to herein as the "Type C" scenario).
With reference generally to Figure 2 which provides a generalized description of one embodiment of the methodology of the present invention, where the Vendor of a First House Page 4 of 10 wishes to sell the First House and, in the case of either a Type A, Type B or Type C scenario, upon determining that there is a possibility that the First House will not have been sold during a predetermined or determinable or acceptable period of time and the Vendor determining that it is desirous to reduce, mitigate or eliminate the risk of having the First House remain on the market for an indeterminate or extended period of time, a third party (hereinafter the "Third Party") collects certain information as more fully described herein, and enters into a policy agreement with the Vendor as more fully described herein. In one embodiment, the Third Party is an insurance company or an entity acting on behalf of, or a direct agent of an insurance company, including for example (unless prohibited by law or regulation), Realtors, brokers, and others.
In the preferred embodiment, the Vendor has listed the First House through a real estate agent, and preferably through one having access to a service such as the MLS
(Multiple Listing Service) system to give broad exposure to the house in the real estate market, it being understood that while this is desirable, in alternative embodiments of the present invention, the Vendor may be selling the First House using various different techniques, including selling it personally without the assistance of a real estate agent, it being understood that in such a scenario, the agreement with the Third Party would be varied to take this into account.
On behalf of the Third Party, in the preferred embodiment, details of the First House and the transaction relating to the First House are determined and recorded, such as, but not limited to:
1. the Vendor's name, 2. the address of the property for sale, 3. the appraised value of the First House (on behalf of the Third Party, the First House is or has been recently appraised, in the preferred embodiment, by a professional appraiser, to determine an accurate estimate of the current value of the First House), 4. the initial listing price (in the preferred embodiment, as to be agreed between the Vendor and the Third Party, the asking or initial listing price of the First House will not exceed a fixed percentage over the appraised value of the First House, which in a preferred embodiment, is no greater than 105%, it being understood that a range of percentages may be considered, depending upon such factors as the local marketplace for houses, the Page 5 of 10 willingness of prospective purchasers to purchase houses in the marketplace at, near or above the asking or listing price, and other factors known to a person skilled in the art), 5. the initial listing date and the duration of the listing, 6. the current Monthly Carrying Costs, including, for example, in the case of the Type A and Type B scenarios, the monthly mortgage costs, plus in the case of Type A, Type B and Type C scenarios, the taxes, insurance, utilities payments, maintenance payments and any other payments which may be the subject of an agreement with the Third Party;
7. the start and end dates which define the term for which the Third Party is agreeable to paying the agreed to Monthly Carrying Costs (or in an alternative embodiment, the agreed-to percentage thereof which is referred to herein as the Agreed-to Percentage of the Monthly Carrying Costs), it being understood that in alternative embodiments, various different selected payments could be the subject of such an arrangement with the Third Party). In an alternative embodiment, the end date is not fixed, but is rather determined by the date on which another event occurs, such as, for example, the date on which the Vendor purchases another house. In a further alternative embodiment, an intermediate date is selected between the start date and the end date (the length of time between the start date and this intermediate date being referred to as the "Full Coverage Duration"), which intermediate date will serves as the date after which claim payments payable to the Vendor will be reduced. For example, in this embodiment, for each month after Full Coverage Duration and prior to the end date, the payment payable to the Vendor is reduced by 5% (or some other agreed to amount) from the amount payable in the previous month. In this embodiment, the monthly payments to the Vendor will continue on a reduced basis until the end date, or until some other pre-determined event has occurred, such as, for example, if the monthly payment payable falls below a pre-determined amount such as $50.00 per month or some other agreed to amount, 8. the name of the real estate agent, if any (it being understood, that in the preferred embodiment a real estate agent, particularly one with access to the MLS system is desired as to reduce the risk that the First House is on the market for a lengthy period time and to maximize the likelihood of an early sale of the First House, at or above the previously agreed to minimum acceptable price as referred to below), 9. identifying whether the Vendor is willing to accept risk coverage for an amount less than Page 6 of 10 the Monthly Carrying Costs, for example by reducing the coverage to 90% or some other percentage of the Monthly Carrying Costs to thereby reduce the Vendor's premium payments payable to the Third Party to accept this reduced risk;
10. any "Elimination Period" (that is, a period of time, typically, although not necessarily, in the weeks or months immediately following the date of the listing of the First House, in which the Vendor is prepared and agreeable to carry the risk of not being able to sell the First House), the Elimination Period generally being derived from the history of other recent sales in the target market area as recorded and reported by realtors in that market area. A typical Elimination Period for a particular market and price range may be that length of time in that particular market for 85% of sales of houses in that price range to be affected. For example, in one embodiment of the present invention, if in a marketplace, 85% of all properties in a price range sold within 90 days of being listed, in that example, 90 days would be the Elimination Period for that marketplace and price range.
It is understood that the Elimination Period may vary over time as the market conditions in the marketplace vary, based on, for example, market demand, market supply, time of year, local economic conditions and other factors known to a person skilled in the art;
It is understood that the Elimination Period may vary over time as the market conditions in the marketplace vary, based on, for example, market demand, market supply, time of year, local economic conditions and other factors known to a person skilled in the art;
11. the Minimum Acceptable Price that the Vendor is willing to accept for the sale of the First House (this information not being provided to the realtor involved in the transaction, to avoid a conflict of interest). In one embodiment of the present invention, where the Vendor is prepared to accept a price below the appraised value of the First House, a premium reduction may be made available from the Third Party.
In alternative embodiments of the present invention, additional information may be collected as would be apparent to a person skilled in the art.
In the preferred embodiment, the Third Party has collected or has access to current and up-to-date "Experience Data" of the following nature (it being understood that in the preferred embodiment, the Experience Data is continuously being updated), namely on a market by market basis, historical data relating to the actual amount of elapsed time taken to sell comparable properties at fair market value, and in the absence of, or supplemental to, such data, the estimated amount of time that will be required to sell the specific property at fair market value in the specific subject Page7of 10 market (in the preferred embodiment, fair market value being determined by a recent appraisal from a certified appraiser) and statistical data or analysis or information relating to the variances of such estimate.
In the preferred embodiment, using the Experience Data such as that provided in Figure 1(in the example of Figure 1, the house is located in Halifax, Nova Scotia, and within the $200,000-$225,000 price range), and the relevant data provided about the First House and the transaction in relation thereto referred to above, in a manner known to a person skilled in the art, and in one embodiment, utilizing a computer or other suitable programmed processor, the Third Party assesses the risk that the First House will not be sold at or above the previously agreed to minimum acceptable price before the expiration of any predetermined Elimination Period, and assesses the risk that the First House will not sell at or above the previously agreed to minimum acceptable price over a range of predetermined periods subsequent to the Elimination Period. In an alternative embodiment of the present invention, the Third Party determines the most likely date of sale of the First House, and for a range of dates before and after such date, the likelihood on each of those days within that range that the First House will sell at or above sell at or above the previously agreed to minimum acceptable price on those days. Using the results of this analysis and the Monthly Carrying Costs (and depending upon which optional or alternative features were the subject of the proposed agreement between the Vendor and the Third Party, such as a the scope of the Monthly Carrying Costs, any Agreed-to Percentage of the Monthly Carrying Costs or any reductions in the Monthly Carrying Costs, the selection of Full Coverage Duration which expires before the end date, any Elimination Period, the Minimum Acceptable Price that the Vendor is willing to accept and such other factors as are to be the subject of an agreement between the Vendor and the Third Party), the Third Party will calculate the potential claims exposure in respect of the sale of the First House, and calculate and quote a premium to be paid by the Vendor (which premium will also take into account the Third Party's overhead, cost of sale, profit and such other amounts as would be understood by a person skilled in the art).
If the Vendor is agreeable to the premium and to such other terms as may be agreed to between the Vendor and the Third Party, an agreement, preferably in writing, may then be entered into between the Vendor and the Third Party, to have the Third Party accept all or some portion of the risk of carrying the agreed to costs associated with the First House past any agreed to point in Page 8 of 10 time on such terms and conditions as are agreeable to the Vendor and Third Party, and any premium due to the Third Party is paid by the Vendor.
In the event that the First House is not sold prior to the agreed upon date with the Third Party, the Third Party will pay to the Vendor on a monthly basis or on such other terms as agreed to by the Vendor and Third Party, upon providing to the Third Party satisfactory proof of all offers on the First House and proof that the First House is unsold, payments of the agreed to Monthly Carrying Costs or any agreed to reduction thereof on the basis of the agreed to terms, it being understood that the Vendor is under no obligation to sell the First House for an amount less than the Minimum Acceptable Price.
The present invention has been described herein with regard to preferred embodiments. However, it will be obvious to persons skilled in the art that a number of variations and modifications can be made without departing from the scope of the invention as described herein.
Page 9 of 10
In alternative embodiments of the present invention, additional information may be collected as would be apparent to a person skilled in the art.
In the preferred embodiment, the Third Party has collected or has access to current and up-to-date "Experience Data" of the following nature (it being understood that in the preferred embodiment, the Experience Data is continuously being updated), namely on a market by market basis, historical data relating to the actual amount of elapsed time taken to sell comparable properties at fair market value, and in the absence of, or supplemental to, such data, the estimated amount of time that will be required to sell the specific property at fair market value in the specific subject Page7of 10 market (in the preferred embodiment, fair market value being determined by a recent appraisal from a certified appraiser) and statistical data or analysis or information relating to the variances of such estimate.
In the preferred embodiment, using the Experience Data such as that provided in Figure 1(in the example of Figure 1, the house is located in Halifax, Nova Scotia, and within the $200,000-$225,000 price range), and the relevant data provided about the First House and the transaction in relation thereto referred to above, in a manner known to a person skilled in the art, and in one embodiment, utilizing a computer or other suitable programmed processor, the Third Party assesses the risk that the First House will not be sold at or above the previously agreed to minimum acceptable price before the expiration of any predetermined Elimination Period, and assesses the risk that the First House will not sell at or above the previously agreed to minimum acceptable price over a range of predetermined periods subsequent to the Elimination Period. In an alternative embodiment of the present invention, the Third Party determines the most likely date of sale of the First House, and for a range of dates before and after such date, the likelihood on each of those days within that range that the First House will sell at or above sell at or above the previously agreed to minimum acceptable price on those days. Using the results of this analysis and the Monthly Carrying Costs (and depending upon which optional or alternative features were the subject of the proposed agreement between the Vendor and the Third Party, such as a the scope of the Monthly Carrying Costs, any Agreed-to Percentage of the Monthly Carrying Costs or any reductions in the Monthly Carrying Costs, the selection of Full Coverage Duration which expires before the end date, any Elimination Period, the Minimum Acceptable Price that the Vendor is willing to accept and such other factors as are to be the subject of an agreement between the Vendor and the Third Party), the Third Party will calculate the potential claims exposure in respect of the sale of the First House, and calculate and quote a premium to be paid by the Vendor (which premium will also take into account the Third Party's overhead, cost of sale, profit and such other amounts as would be understood by a person skilled in the art).
If the Vendor is agreeable to the premium and to such other terms as may be agreed to between the Vendor and the Third Party, an agreement, preferably in writing, may then be entered into between the Vendor and the Third Party, to have the Third Party accept all or some portion of the risk of carrying the agreed to costs associated with the First House past any agreed to point in Page 8 of 10 time on such terms and conditions as are agreeable to the Vendor and Third Party, and any premium due to the Third Party is paid by the Vendor.
In the event that the First House is not sold prior to the agreed upon date with the Third Party, the Third Party will pay to the Vendor on a monthly basis or on such other terms as agreed to by the Vendor and Third Party, upon providing to the Third Party satisfactory proof of all offers on the First House and proof that the First House is unsold, payments of the agreed to Monthly Carrying Costs or any agreed to reduction thereof on the basis of the agreed to terms, it being understood that the Vendor is under no obligation to sell the First House for an amount less than the Minimum Acceptable Price.
The present invention has been described herein with regard to preferred embodiments. However, it will be obvious to persons skilled in the art that a number of variations and modifications can be made without departing from the scope of the invention as described herein.
Page 9 of 10
Claims
OR PRIVILEGE IS CLAIMED ARE DEFINED AS FOLLOWS:
1. A method of reducing the risk to a Vendor of a First House that the Vendor of the First House' will have to pay the Monthly Carrying Costs associated with the First House in the event that the First House is not sold within an acceptable period of time, comprising the steps of:
calculating the Monthly Carrying Costs associated with the First House;
establishing a Minimum Acceptable Price for the sale of the First House;
calculating the likelihood that the First House will not be sold at or above the Minimum Acceptable Price during the acceptable period of time and calculating the likely length of time required to sell the First House at or above the Minimum Acceptable Price;
calculating the potential claim exposure of having to pay the Monthly Carrying Costs after the acceptable period of time until the First House is sold at or above the Minimum Acceptable Price;
calculating a premium to be charged to the Vendor;
the Vendor entering into an agreement with a Third Party, wherein the Vendor agrees to pay the premium, and the Third Party agrees to pay the Monthly Carrying Costs associated with the First House in the event that First House is not sold within the acceptable period of time and until such time as the First House is sold at or above the Minimum Acceptable Price.
calculating the Monthly Carrying Costs associated with the First House;
establishing a Minimum Acceptable Price for the sale of the First House;
calculating the likelihood that the First House will not be sold at or above the Minimum Acceptable Price during the acceptable period of time and calculating the likely length of time required to sell the First House at or above the Minimum Acceptable Price;
calculating the potential claim exposure of having to pay the Monthly Carrying Costs after the acceptable period of time until the First House is sold at or above the Minimum Acceptable Price;
calculating a premium to be charged to the Vendor;
the Vendor entering into an agreement with a Third Party, wherein the Vendor agrees to pay the premium, and the Third Party agrees to pay the Monthly Carrying Costs associated with the First House in the event that First House is not sold within the acceptable period of time and until such time as the First House is sold at or above the Minimum Acceptable Price.
Priority Applications (5)
| Application Number | Priority Date | Filing Date | Title |
|---|---|---|---|
| CA 2578451 CA2578451A1 (en) | 2007-02-13 | 2007-02-13 | A system and method for insuring real estate transactions |
| CA 2595742 CA2595742A1 (en) | 2007-02-13 | 2007-08-01 | A system, method and insurance product for insuring real estate transactions |
| US11/847,958 US8380543B2 (en) | 2007-02-13 | 2007-08-30 | System, method and insurance product for insuring real estate transactions |
| AU2008215125A AU2008215125A1 (en) | 2007-02-13 | 2008-01-28 | A system, method and insurance product for insuring real estate transactions |
| PCT/CA2008/000177 WO2008098345A1 (en) | 2007-02-13 | 2008-01-28 | A system, method and insurance product for insuring real estate transactions |
Applications Claiming Priority (1)
| Application Number | Priority Date | Filing Date | Title |
|---|---|---|---|
| CA 2578451 CA2578451A1 (en) | 2007-02-13 | 2007-02-13 | A system and method for insuring real estate transactions |
Publications (1)
| Publication Number | Publication Date |
|---|---|
| CA2578451A1 true CA2578451A1 (en) | 2008-08-13 |
Family
ID=39687858
Family Applications (2)
| Application Number | Title | Priority Date | Filing Date |
|---|---|---|---|
| CA 2578451 Abandoned CA2578451A1 (en) | 2007-02-13 | 2007-02-13 | A system and method for insuring real estate transactions |
| CA 2595742 Abandoned CA2595742A1 (en) | 2007-02-13 | 2007-08-01 | A system, method and insurance product for insuring real estate transactions |
Family Applications After (1)
| Application Number | Title | Priority Date | Filing Date |
|---|---|---|---|
| CA 2595742 Abandoned CA2595742A1 (en) | 2007-02-13 | 2007-08-01 | A system, method and insurance product for insuring real estate transactions |
Country Status (3)
| Country | Link |
|---|---|
| AU (1) | AU2008215125A1 (en) |
| CA (2) | CA2578451A1 (en) |
| WO (1) | WO2008098345A1 (en) |
Families Citing this family (1)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| US11037245B1 (en) | 2015-10-15 | 2021-06-15 | Allstate Insurance Company | Generating insurance quotes |
Family Cites Families (2)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| US20040260578A1 (en) * | 2003-06-17 | 2004-12-23 | Mengcheng Jin | Real estate devaluation insurance |
| CA2485927A1 (en) * | 2004-11-19 | 2006-05-19 | Nick Antonacci | Secure sale real-estate transaction default insurance |
-
2007
- 2007-02-13 CA CA 2578451 patent/CA2578451A1/en not_active Abandoned
- 2007-08-01 CA CA 2595742 patent/CA2595742A1/en not_active Abandoned
-
2008
- 2008-01-28 WO PCT/CA2008/000177 patent/WO2008098345A1/en active Application Filing
- 2008-01-28 AU AU2008215125A patent/AU2008215125A1/en not_active Abandoned
Also Published As
| Publication number | Publication date |
|---|---|
| WO2008098345A1 (en) | 2008-08-21 |
| AU2008215125A1 (en) | 2008-08-21 |
| CA2595742A1 (en) | 2008-08-13 |
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Legal Events
| Date | Code | Title | Description |
|---|---|---|---|
| FZDE | Dead |
Effective date: 20130213 |