Real estate broker: Some people in Country X have postponed home purchases because of this week's news stories claiming that...
GMAT Critical Reasoning : (CR) Questions
Real estate broker: Some people in Country X have postponed home purchases because of this week's news stories claiming that real estate prices will probably fall soon. But to get a good deal on a new home, a better strategy is to buy precisely when the media is advising everyone to sell. Widespread pessimistic news stories encourage panics that put downward pressure on real estate prices.
The real estate broker's argument is most vulnerable to criticism on the grounds that it
Passage Analysis:
| Text from Passage | Analysis |
| Some people in Country X have postponed home purchases because of this week's news stories claiming that real estate prices will probably fall soon. |
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| But to get a good deal on a new home, a better strategy is to buy precisely when the media is advising everyone to sell. |
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| Widespread pessimistic news stories encourage panics that put downward pressure on real estate prices. |
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Argument Flow:
The broker starts by acknowledging that people are postponing home purchases due to negative news, then argues they should do the opposite - buy when media says sell - and supports this with the reasoning that negative news creates panic selling which drives prices down.
Main Conclusion:
When media advises selling homes, that's actually the best time to buy because you'll get better deals.
Logical Structure:
The broker uses a cause-and-effect chain: negative media coverage causes panic selling, which causes lower prices, which creates good buying opportunities. However, this reasoning assumes that panic-driven price drops always create genuine bargains rather than reflecting real market problems.
Prethinking:
Question type:
Misc - This is asking us to identify a flaw or weakness in the broker's reasoning. We need to find what makes the argument vulnerable to criticism.
Precision of Claims
The broker makes a specific strategic claim about timing (buy when media says sell) and a causal claim about how news stories create panic that lowers prices.
Strategy
Since this is a flaw question, we need to identify logical gaps, questionable assumptions, or reasoning errors in the broker's argument. The broker assumes that pessimistic news always creates panic selling that leads to lower prices, and that buying during such times is always a good strategy. We should look for scenarios where this reasoning breaks down or overlooks important factors.
This correctly identifies a major flaw in the broker's reasoning. The broker assumes that pessimistic news stories are the primary driver of potential price declines and treats them as creating artificial panic-selling opportunities. However, the broker completely overlooks that the news stories might be accurately reporting on genuine economic factors that will cause prices to fall regardless of media coverage. If real estate prices are going to decline due to fundamental market conditions (economic downturn, oversupply, interest rate changes, etc.), then buying during negative news coverage isn't a smart contrarian move - it's buying before a legitimate price drop. This makes the argument vulnerable because the broker's strategy could lead people to make poor financial decisions.
This is incorrect because the broker's argument doesn't rely on assumptions about personal financial factors determining homebuying decisions. The broker is focused on timing strategy (when to buy) rather than who becomes a homebuyer or what personal factors influence that decision. The argument is about market timing, not personal financial circumstances.
This mischaracterizes the broker's approach to the news stories. The broker isn't taking for granted that the news stories are based on careful research - in fact, the broker is somewhat dismissive of the news stories, suggesting they create panic rather than provide valuable information. The broker's argument treats the news stories as potentially misleading rather than as carefully researched reports.
This doesn't represent a flaw in the broker's reasoning. If anything, the possibility that pessimistic news drives prices to very low levels would strengthen the broker's argument that buying during such times leads to good deals. The broker wants prices to go down due to panic selling - that's the whole point of the contrarian strategy. Very low prices would be even better for buyers.
This is incorrect because the speed of price changes isn't central to the broker's argument. Whether pessimistic news affects prices quickly or slowly doesn't impact the core logic that buying when others are selling (due to negative news) creates opportunities. The timing of the price impact doesn't make the argument vulnerable - the broker's strategy works regardless of whether the price effects are immediate or gradual.