Rex Agreement: Bad Idea

        There is a new company in town called Rex & Co. Their product is the Rex Agreement, which is a simple way to get money using the equity from your home. Reporter Elizabeth Rhodes from the Seattle Pi explains some of the ins and outs of The Rex Agreement

http://seattletimes.nwsource.com/html/realestate/2004283185_rex16.html

However, if you really look at the numbers that they use in the article, the Rex Agreement consumes most if not all of your equity.   If it sounds to good to be tru it probably is….How the Rex Agreement works is that you essentially have another person who is part owner in your home.  You receive an amount of money for a percentage of your equity. In the example in the article you get 15% of the value of your home for 50% of your future equity.

Example:                 Current Value – $500,000
                                     15% of Appraised Value – $75,000 (for 50% of your equity)

                                    Future Value: $700,000
                                     Equity Increase: $200,000
                                     Pay Off Of Original Agreement: $75,000
                                     Payment Of Rex Agreement: $100,000 (which equals 50% of your equity) 

                                    Total Amount to Rex & Co.:  $175,000

This leaves you with only $25,000 before closing cost, taxes and/or capital gains. It will make it very difficult to move!   

Why has Rex & Co. moved to Seattle and not to areas such as Detroit, Florida or Las Vegas?  The answer is simple.  Seattle is a great market that is going to be increasing in value and has been consistently.  There are many factors of why this is happening and I will talk about those reasons in my next post.