Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of David Goldberg - UBS
David Goldberg - UBS
First question is about the proposal in Obama’s budget to limit the deductibility of the interest portion of mortgage payments and what you think that means for both buyers.
Robert Toll
Well as soon as it was announced we got the pencils out, we cranked some numbers. Surprisingly enough if you, and I haven’t got the numbers in front of me, but there’s slight differential. Its not as bad as it sounded. At first cutting it off at 28%, by the way charitable worked the same way as I recall, seemed like it was going to mean quite a bit but when we put pencil to paper it didn’t amount to much and we don’t think it will have much of effect on the sale of homes. If in fact it passes.
David Goldberg - UBS
And I would take that to mean psychologically too that’s not going to be a problem, I understand pencil and paper and the actual numbers but psychologically you don’t think its an issue.
Robert Toll
Psychologically I think it’s a larger issue and we’ll have to do some explaining in order to get over that. I think one would come into the model, the sample area, discuss it with the salesperson, say why should I and I think we have to take the opportunity given to us in the sales office to explain why the differential is not that meaningful on a numbers basis. But you are right, there will be a psychological impediment that we have to overcome. It may not pass especially since charitable deductions are tied to it. But we may overcome yet.
David Goldberg - UBS
I was hoping you could give some more detail, you mentioned in the release this morning that the land market you were starting to see opportunities and I guess I was wondering what it is that’s going kind of cost Toll to go out and pull the trigger, what is it that’s stopping you and what you’d have to see to start going out and acquiring lots that you thought (a) maybe you could deliver on quickly or you thought you were getting great deals.
Robert Toll
I think that we just need to be convinced that forgoing some liquidity and cash on hand is better then not buying so we balance very closely with an eye towards the balance sheet and want to make sure that its an absolute screaming bargain, that its shovel ready, that we can get homes to the market quickly, that we don’t have to improve the property of course and that it will be perceived by even the most cautious and conservative to have been a good buy. The last thing we want to do is buy something that just slumps along and sells one a month and doesn’t put the money back on our balance sheet in fast order.
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