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We’re not Goldman Sachs

Homebuyer Associates May 2010 E-Note

Homebuyer Associates           www.homebuyerassociates.com

414.254.4129                              homebuyeba@gmail.com

Michael D. Holloway/Seamus Holloway

Lynn Sarver/Paul Wollersheim

We’re Not Goldman Sachs

I was kicked out of 5th grade as a student at St. Rose of Lima.   In my household there was no discussion.  My mother informed me that the nun was correct and I was wrong and that I had to apologize to Sister Michaline to be returned to the 5th grade.  Now, 4th grade was pretty easy for me as I’d completed it the year before so I took a week to make the apology but apologize I did.  In looking back I often wonder if this was the start of my belief in personal accountability.  It certainly reflects the power of good teachers and good mothers.

I’ve read and watched a great deal lately about Goldman Sachs.   From my reading what they did was wrong but probably not illegal.  I’m not a lawyer (but I did take the LSAT’s).  A similar situation has existed in real estate – wrong but not illegal – that the public has yet to fully understand.

Goldman was the underwriter of a security it sold to customers/clients.  At the same time Goldman was shorting (betting against) the security.  Goldman did their job.  They acted as a broker. 

Goldman Sachs

1.         Goldman underwrites security

2.         Goldman sells security to customer

3.         Goldman shorts (bets against) security

This process allowed the broker (Goldman) to make money without taking a fiduciary position.  Goldman was selling a product to a customer and in some cases “client”, yet not technically working for that customer/client.  They were brokers.

What struck me as the Goldman story unfolded was that – like buying a home – the process used by Goldman was wrong, probably legal and accepted by their investors.  As long as no one was hurt financially no one seemed to care.  I think it is reasonable to ask, “Doesn’t the consumer have some personal responsibility (accountability) to investigate the process to limit the potential for loss?”

“Broker” is defined as: “A party that mediates between a buyer and a seller in exchange for a commission.”

In real estate if a homebuyer wants to accept a “mediator” or a buyer agent that works within a company that sells homes then the homebuyer shares some responsibility for their choice.    When a homebuyer agrees to work with a “mediator” or, as I refer to them, – “fake buyer agent” – the process looks something like:

Xyz Real Estate Company

Xyz lists home for sale and works for seller

Xyz sells home to customer but works for seller

Xyz sells home to client but Xyz company works for seller.

While institutions can clearly be at fault, I believe investors and homebuyers have a responsibility to manage their finances.  I started making this statement about housing and homebuyers 15 years ago.  I’m suggesting that homebuyers learn to ask the right questions and understand the real estate process to protect their money.

At Homebuyer Associates we’ve never claimed to be mediators.  We are Exclusive Buyer Agents that work only for you…the home buyer.

Homebuyer Associates

Homebuyer Associates –   does not list homes for sale

Homebuyer Asscociates Exclusive Buyer Agents

work only for the buyer

As is often the case, when in doubt, I consult Warren Buffett, Jimmy Buffett and Dylan, among others.  Dylan seems to be on point.  “The moral of this story, the moral of this song, is simply that one should never be where one does not belong.”


If you don’t understand what you are investing in or are not clear who the person you are speaking to works for – whether investing or buying real estate – then it is clear you “should never be where one does not belong”. For your own financial well being take the time to ask questions and understand the process whether investing or buying a home.

Thanks for reading.

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