Edward de Bono's Weekly Message
Property Market
When the property market is falling buyers tend to wait until it falls further. Why buy now when you can get a lower price in a few months' time? So the market falls further because some people need to sell and lower their price.
We could create a new type of contract. You sell at today's price but contract with the buyer that in a year (or two years) if the house price index has fallen by a further twelve per cent then you refund that twelve per cent to the buyer. There is now no point in waiting. So the market stops falling and you may not have to refund anything. This could be a new type of contract which anyone could be free to use.
--Edward de Bono
Labels: creativity, de bono, innovation, lateral thinking, six hats
posted by Innova Training and Consulting, Inc. @ 10:34 AM
4 Comments:
If the common goal was to prevent home prices from falling, this solution would prevail. But is this a common goal? I think not. In real estate as in the stock market, there are "short sellers" who profit from lower prices; it's part of their investment strategy. Putting aside the difficulty of ensuring that sellers keep in escrow 12% of their receipts from sales, what is the advantage to the buyer if his or her purpose is to acquire cheap properties in hopes that the market will rebound? Given differing motives among buyers and among sellers, and between them, how popular would this strategy be?
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