Thursday, October 30, 2008

Real-state market

When real-state price is falling many investors/buyers tend to wait until it falls further. This hurts the economy. As a result the market falls further because some people need to sell at lower price.
Why not, create a new deal that you sell at today's price but contract with the buyer that in a year or two if the house price index has fallen by a certain percentage (you keep that in an escrow but collect interest) then you refund that % to the buyer. There is no point in waiting. The market moves in a self organized way (not by government intervention) and the market stops falling and you may not have to refund anything. This could be a new type of contract which creates possibility of win-win situation.

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