Method of securitizing and trading real estate brokerage options

• US 6,615,187 B1
• Filed: 02/09/2000
• Issued: 09/02/2003
• Est. Priority Date: 02/09/2000
• Status: Expired due to Term

• Current Assignee: Daniel S. Berns, John W. Drury, Warren S. Ashenmil
• Original Assignee: Daniel S. Berns, John W. Drury, Warren S. Ashenmil
• Inventors: Berns, Daniel S., Drury, John W., Ashenmil, Warren S.
• Primary Examiner(s): Millin, Vincent
• Assistant Examiner(s): Bashore, Alain L.
• Application Number:
  US09/501,261
• Time in Patent Office: 1,301 Days
• Field of Search: 705/35, 705/36, 705/37, 705/38, 705/1, 705/14, 705/39
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 50/16 Real estate

Abstract

The present invention relates to a method of creating, purchasing and selling the real estate brokerage commissions typically collected upon the sale of real property. A property owner sells, for a certain consideration, the assignable option to be the owner'"'"'s broker when the owner decides to resell the property. The compensation paid may be in the form of cash or an equivalent incentive. The option has an expected return associated with it that will vary depending upon a number of factors including, but not limited to, the value of the property and the predicted amount of brokerage commission to be earned upon resale of the property. The option can be sold through securitization or some other method. The option can also become a traded commodity and form the basis for a real estate options and futures market.

Claims

1. A method of doing business comprising the steps of:

purchasing from an owner of a real property, in exchange for a consideration, an assignable entitlement to act as the owner'"'"'s real estate agent when the owner sells the property, wherein said entitlement confers the right to a commission on the sale of the property;

creating a pool consisting of the entitlement and at least one other entitlement to represent at least one other owner of at least one other real property; and

determining a current value of the pool of entitlements from at least one of the current values of the individual entitlements;

wherein at least part of one of said steps utilizes a computer.

2. The method of claim 1 further comprising the step of executing a legally binding document that places an encumbrance on the title of the real property requiring satisfaction of the entitlement.

3. The method of claim 1 further comprising the step of determining a current value of the entitlement from at least one of (a) the current value of the real property, (b) an estimated rate of appreciation in the value of the real property, and (c) an expected date of resale.

4. The method of claim 1 further comprising the step of selling the entitlement.

5. The method of claim 1 further comprising the step of selling at least a portion of the pool of entitlements.

6. The method of claim 1 wherein the consideration comprises money.

7. The method of claim 1 wherein the consideration is related to a credit card.

8. The method of claim 1 wherein the consideration comprises credit redeemable for designated goods or services.

9. The method of claim 1 wherein the consideration comprises at least one of a discount on a mortgage loan rate, a discount on mortgage loan fees, a credit applicable towards mortgage payments, and a grace period for paying mortgage payments.

10. The method of claim 1 wherein the real property is a residential property.

11. The method of claim 1 wherein the real property is a commercial property.

12. The method of claim 1 wherein the brokerage commission is approximately equal to 6 percent of the sale price of the real property.

13. The method of claim 3 wherein the current value of the real property is determined from at least one of:

tax records, actual sale price records, local sale price records, local property valuations, average local sale price, median local sale price, and actual local brokerage commissions earned.

14. The method of claim 3 wherein the current value of the real property is determined from at least one of:

(a) an average time between property sales, (b) an average time that a property spends on the market, (c) an average rate of appreciation in property value, and (d) an average rate of inflation.

15. The method of claim 3 wherein said step of determining a current value of the entitlement further comprises estimating the costs associated with providing brokerage services.

16. The method of claim 3 further comprising the step of estimating a risk associated with the entitlement from at least one of:

(a) the estimated value of the entitlement, (b) the likelihood that the entitlement will be realized, (c) the estimated time until the entitlement will be realized, (d) the predicted rate of appreciation in the value of the property, and (e) the possibility that the property will suffer catastrophic damage.

17. The method of claim 1 wherein the current value of the pool of entitlements is determined from at least one of:

tax records, actual sale price records, average sale price records, average property valuations, median sale price records, median property valuations, and average brokerage commissions earned.

18. The method of claim 1 wherein the current value of the pool of entitlements is determined from at least one of:

(a) an average time between property sales, (b) an average time that a property spends on the market, (c) an average rate of appreciation in property value, and (d) an average rate of inflation.

19. The method of claim 1 wherein the risk associated with the pool of entitlements is estimated from at least one of:

(a) the estimated value of the pool of entitlements, (b) the likelihood that the entitlements will be realized, (c) the expected number of entitlements within the pool that will be realized, (d) an estimated time until the entitlements will be realized, and (e) the predicted rate of appreciation in the values of the entitlements.

20. The method of claim 1 further comprising the step of creating a financial instrument, wherein the value of the instrument varies depending upon the value of the entitlement.

21. The method of claim 1 further comprising the step of creating a financial instrument, wherein the value of the instrument varies depending upon the value of at least a portion of the pool.

22. The method of claim 1 wherein the owner of the real property is a buyer of the real property and said step of purchasing the entitlement occurs at the time of closing of the purchase.

23. The method of claim 1 wherein at least a portion of said method is performed using an internet.

24. A method of doing business comprising the steps of:

purchasing from an owner of a real property, in exchange for a consideration, an assignable entitlement to act as the owner'"'"'s real estate agent when the owner sells the property, wherein said entitlement confers the right to a commission on the sale of the property;

determining a cent value of the entitlement from at least one of;

(a) the current value of the real proper, (b) an estimated rate of appreciation in the value of the real property, and (c) an expected date of resale; and

assessing a risk associated with the entitlement

wherein at least part of one of said steps utilizes a computer.

25. The method of claim 24 further comprising the step of executing a legally binding document that places an encumbrance on the title of the real property requiring satisfaction of the entitlement.

26. The method of claim 24 further comprising the step of selling the entitlement.

27. The method of claim 24 further comprising the step of creating a pool consisting of the entitlement and at least one other entitlement to represent at least one other owner of at least one other real property.

28. The method of claim 27 further comprising the step of determining a current value of the pool of entitlements from at least one of the current values of the individual entitlements, and the risk associated with the entitlements.

29. The method of claim 27 further comprising the step of selling at least a portion of the pool of entitlements.

30. The method of claim 24 wherein the consideration comprises money.

31. The method of claim 24 wherein the consideration is related to a credit card.

32. The method of claim 24 wherein the consideration comprises credit redeemable for designated goods or services.

33. The method of claim 24 wherein the consideration comprises at least one of a discount on a mortgage loan rate, a discount on mortgage loan fees, a credit applicable towards mortgage payments, and a grace period for paying mortgage payments.

34. The method of claim 24 wherein the real property is a residential property.

35. The method of claim 24 wherein the real property is a commercial property.

36. The method of claim 24 wherein the brokerage commission is approximately equal to 6 percent of the sale price of the real property.

37. The method of claim 24 wherein the current value of the real property is determined from at least one of:

tax records, actual sale price records, local sale price records, local property valuations, average local sale price, median local sale price, and actual local brokerage commissions earned.

38. The method of claim 24 wherein the current value of the real property is determined from at least one of:

(a) an average time between property sales, (b) an average time that a property spends on the market, (c) an average rate of appreciation in property value, and (d) an average rate of inflation.

39. The method of claim 24 wherein said step of determining a current value of the entitlement further comprises estimating the costs associated with providing brokerage services.

40. The method of claim 24 wherein the risk associated with the entitlement is estimated from at least one of:

(a) the estimated value of the entitlement, (b) the likelihood that the entitlement will be realized, (c) the estimated time until the entitlement will be realized, (d) the predicted rate of appreciation in the value of the property, and (e) the possibility that the property will suffer catastrophic damage.

41. The method of claim 24 further comprising the step of creating a financial instrument, wherein the value of the instrument varies depending upon the value of the entitlement.

42. The method of claim 24 wherein the owner of the real property is a buyer of the real property and said step of purchasing the entitlement occurs at the time of closing of the purchase.

43. The method of claim 24 wherein at least a portion of said method is performed using an internet.

44. A method of doing business comprising the steps of:

purchasing from an owner of a real property, in exchange for a consideration, an assignable entitlement to act as the owner'"'"'s real estate agent when the owner sells the property, wherein said entitlement confers the right to a commission on the sale of the property;

creating a pool consisting of the entitlement and at least one other entitlement to represent at least one other owner of at least one other real property; and

determining a current value of the pool of entitlements from at least one of the current values of the individual entitlements, and a risk associated with the entitlements

wherein at least part of one of said steps utilizes a computer.

45. The method of claim 44 further comprising the step of executing a legally binding document that places an encumbrance on the title of the real property requiring satisfaction of the entitlement.

46. The method of claim 44 further comprising the step of determining a current value of the entitlement from at least one of:

(a) the current value of the real property, (b) an estimated rate of appreciation in the value of the real property, and (c) an expected date of resale.

47. The method of claim 44 further comprising the step of selling the pool of entitlements.

48. The method of claim 44 wherein the consideration comprises money.

49. The method of claim 44 wherein the consideration is related to a credit card.

50. The method of claim 44 wherein the consideration comprises credit redeemable for designated goods or services.

51. The method of claim 44 wherein the consideration comprises at least one of a discount on a mortgage loan rate, a discount on mortgage loan fees, a credit applicable towards mortgage payments, and a grace period for paying mortgage payments.

52. The method of claim 44 wherein the real property is a residential property.

53. The method of claim 44 wherein the real property is a commercial property.

54. The method of claim 44 wherein the brokerage commission is approximately equal to 6 percent of the sale price of the real property.

55. The method of claim 44 wherein the current value of the pool of entitlements is determined from at least one of:

tax records, actual sale price records, average sale price records, average property valuations, median sale price records, median property valuations, and average brokerage commissions earned.

56. The method of claim 44 wherein the current value of the pool of entitlements is determined from at least one of:

(a) an average time between property sales, (b) an average time that a property spends on the market, (c) an average rate of appreciation in property value, and (d) an average rate of inflation.

57. The method of claim 44 wherein said step of determining a current value of the pool of entitlements further comprises estimating the costs associated with providing brokerage services.

58. The method of claim 44 wherein the risk associated with the pool of entitlements is estimated from at least one of:

(a) the estimated value of the pool of entitlements, (b) the likelihood that the entitlements will be realized, (c) the expected number of entitlements within the pool that will be realized, (d) an estimated time until the entitlements will be realized, and (e) the predicted rate of appreciation in the values of the entitlements.

59. The method of claim 44 further comprising the step of creating a financial instrument, wherein the value of the instrument varies depending upon the value of at least a portion of the pool.

60. The method of claim 44 wherein the owner of the real property is a buyer of the real property and said step of purchasing the entitlement occurs at the time of closing of the purchase.

61. The method of claim 44 wherein at least a portion of said method is performed using an internet.