Spot Markets and Futures Markets in Real Estate

by | May 18, 2022 | Saul's Insights | 0 comments

Lesson Plan For The Future

Spot Markets and Futures Markets in Real Estate

Currently, real estate comprises about 43% of the assets in the US, with no spot market, and therefore no futures market.

They are coming, so a little knowledge before hand can be helpful as you prepare your business for change and plan the next phase of your real estate career.

Fundamentals:

“A spot market is where financial instruments, such as commodities, currencies, and securities, are traded for immediate delivery.

Delivery is the exchange of cash for the financial instrument.

A futures contract is based on the delivery of the underlying asset at a future date.”

A Spot Market is needed for there to be a Futures Market.

Futures markets allow Investors, producers and consumers to engage in “hedging” in order to limit the risk of losing money as prices change.

Watch the big players, CoStar and ICE, with Spot and Futures markets in the back of your mind.

The value of a Spot Market is huge (as it allows for a Futures Market), and the Industry MLSs have the best opportunity to create the best spot market, and reverse the economic model of MLS. (you could be paid to enter your listing into an MLS, instead of the current, other way around.

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