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A Train. Some Tracks. Some Risk.

There was uncertainty and risk, the former fed my feeling of the latter.

The train rambled along at 20 mph, whistle blaring, the lead locomotive 200 yards away. The uncertainty? Who was going to jump first, me or Ronald Ricketts? The risk? You get hit by a train.

We were all of 11 years old on a trestle bridge over the Milwaukee River below the Wisconsin Avenue viaduct.

Two months ago, mortgage rates were at 3.0% and agents were fielding multiple offers on homes. There was no such thing as a price reduction and buyers needed 15% or more for a down payment.

Now, rates are 5.25%, we ae seeing limited price reductions and multiple, but fewer, offers on homes and buyers may be able to buy with 5%-10% down.

Home buyers face uncertainty today and metaphorically may feel like they are on that bridge of my youth.

Will higher mortgage rates mean lower home prices? Will buyers now be able to negotiate? Will home prices fall? How much might buyers have to overpay? What contingencies should be waived?


My plan started with being to the right of Ronald as the train would bear down on him before me. My goal was to be the last to jump. The last to jump won.

According to behavioral economist Daniel Kahneman, within the adage “No risk, no reward” are fast and slow-risk decisions.

The first decision (where to stand) was slow risk: deliberate, conscious, self-aware, and logical.

The second was a fast-risk decision: Unconscious, automatic, and effortless.


Home buyers often make fast-risk decisions abetted by agent information which benefits the seller or no information. This approach may nudge them to a choice they later regret.

How do you limit risk? You make slow, not fast decisions. Slow-risk decisions involve having questions and concerns answered before the home search begins. With information, you can make the fast risk decision to buy…but always based information, not emotion.

 (The risks increase if you   are selling and buying. You   are then playing chess, not   checkers. For information   on the sell/buy process   please contact us. We’ve   worked with many past   clients to sell/buy even   though we only represent   buyers.)

You are served best when   you understand the risks   associated with each step   in  the buying process. Every purchase is unique because every purchase involves a structure, piece of dirt and personalities. So, how do you succeed?

1. Understand it’s human nature to focus on loss, a downside of risk, rather than the upside of the reward. Understand the risk, understand the reward.

2. Ask questions about the process before you begin and understand the risk of waiving contingencies.

3. Know the value of the home, what you might have to pay and how long you may have to remain in the home to make up for any price you may have paid beyond value.

4. Make slow, not fast decisions. That doesn’t mean delay your decision, it means make a deliberate, rational decision (Slow) not an unconscious, automatic, effortless decision (Fast).

5. Waiving inspections should never happen. Do understand the risk involved in waiving other contingencies. Under certain circumstances, waving or limiting contingencies can make your offer the winner, but you should know the risks involved.

When asked why they don’t own a home, Millennials and Gen Z cite 3 reasons: Insufficient income (41%); home prices are too high (33%) and can’t afford a down payment (33%).

All are reasons to be concerned but reasons without reasoning (Slow risk thinking) will limit your future financial security (owning vs. renting).

Said another way…don’t jump off the bridge without a plan but do jump.

A good starting point for slow risk decision-making is coffee. Contact Seamus, Mike or me if you have questions or concerns about how best to jump safely.

P.S. For those keeping score, Ronald Ricketts usually won.

Thanks for reading,
Michael D. Holloway

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Homebuyer Associates
1835 N. Riverwalk Way
Milwaukee, WI 53212
Phone: 414-254-4129