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What Choices will You Make

2014. It’s new.  This means I’ll make a mental note to get the information needed to make smart choices this year.  My information gathering will involve money management and possibly the best method to buy a used car.

For those thinking of buying a home a good starter question is, “Who does the agent work for and will the agent work for my financial interests, against my interests or be a neutral player?”  We’re talking real money people.  I’m hammering home this point at the start of the New Year because it involves your money.  I’ll not write directly about it again this year, promise.

In that spirit, this opening 2014 newsletter (co-written by my nephew Seamus Holloway) is a reminder to ask questions, question the answers and gather the information necessary to make informed, not emotional choices.

“I got a great deal”, a friend of mine stated as he drove us to a lunchtime appointment.   He was talking about tires, car tires.  How did he know it was a great deal?  Did he research tires, what similar tires sold for?  Were these the tires he needed or was he sold an upgrade?  I don’t know the answer either.  I’m not an exclusive tire buyer broker.

Maybe you’ve been there:  At parties, people talk about having purchased a home. ‘They got a great deal’ usually means they bought for ‘X’ amount less than the asking price.  What didn’t they talk about?  They didn’t talk about worth.

Their value proposition may have been based on an arbitrary asking price (called anchoring).  They may have paid too much for the home (or tires) but felt good because it was lower than the asking price.  That’s not a deal.  That’s paying less than an arbitrary asking price.  Retail stores are famous for their markdowns.  Did you know that there is a 70% mark up (anchoring) on some retail items so that the outlet can sell for 50% off?

The party talk might continue to the suggestion to ‘always offer X percent less than the asking price’.  What if X percent off of the asking price is still $20,000 more than the home is worth?  Behavioral economics say that a good selling technique is supposed to make you feel good, which is why buying for $20,000 less, yet paying more than worth – works – for the seller.  It’s why I advocate for first determining value as one method to counter sales techniques.

The question of value impacts our daily lives.  It begins with, is it a need or a want?  As an aside the link below (the film Worn Wear) is a brilliant piece of advertising which raises that question.


One often hears homebuyers remark that their agent provided them with market information before they made an offer.  The problem with that information is that it’s raw, unadjusted data – it doesn’t assign any value to distinctions (wood exterior vs. brick, for example) and may not be geographically relevant.

We can’t help you with tires but in terms of housing we both can.  All real estate is local – perhaps even ‘micro-local’ – which means that what nearby homes sold for recently affects value.  Since each home is different, distinctions should be accounted for when considering a home’s value. Nearby and recently are important.

Question the answers.  Your year.  Your choices.  Your future.

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