Recently I had a phone conversation with a buyer who said he'd really like to see all the banks put out of business. He went on to say that we, the taxpayers, are stuck with the bill to clean up this credit mess and the banks should have to suffer by basicly being shut down. Sometimes when situations as they often do with home buying become emotional people are not thinking the situation fully through to its potential outcome. Let's look at this scenario more closely one of a buyer looking for a one family home in Brooklyn finds the house he wants to buy and the seller agrees to and accepts our buyer's offer and now they will proceed to contract. Our buyer has indicated he will be buying fully with cash and does not require the services of a lender. However, our seller now moving does require a lender even after satisfying his current mortgage. But, in our buyer's flawed scenario the banks have been shut down for the greater good and the seller cannot borrow to buy his next home and as a result the buyer cannot get into the house he desires. As the realtor I tell the buyer perhaps there is a way. You're paying cash and knowing real estate prices, historically, have gone up why not pay more for that "value to be realized in the future" so you can get into the house you want and the seller can move onto the house they want. Now I'm sure you see many problems with this idea especially I for one would see a substantial increase to my commission and the potential property tax increase not to mention the insurance would not be on par with the value. The buyer would be "underinsured" not to mention what if the market takes a huge downturn and only realizes a levelling off when our buyer wants to sell.
Any other problems with this scenario? Please let me know what I missed as I am sure I didn't cover all aspects.
How about the small business person willing to start up with their idea and put some local people to work but since there are no banks to lend to the small business person there will be no small business. Is anyone seeing the potential outcome of this problem?
What are your thoughts? I'd really like to hear from you. Thank you in advance.