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What We Tell People

“Don’t gamble; take all your savings and buy good stocks and hold them until they go up, then sell them. If they don’t go up, don’t buy them.” – Will Rogers

Buying a home today feels like a gamble to homebuyers. The market has changed so much in the past 2 years that whether you are a first-time buyer, or have owned homes before, there is much to be wary of and much new to understand.

Robert Shiller is a favorite read of mine. Shiller, an economist and professor at Yale, started the Case-Shiller housing index. Writing in the Wall Street Journal in August of 2006, Shiller noted:

“There is significant risk of a very bad period, with slow sales, slim commissions, falling prices, rising default and foreclosures, serious trouble in financial markets, and a possible recession sooner than most of us expected.”

A housing collapse occurred in 2007.

This July Shiller wrote:

“This (the housing market) poses a dilemma for prospective homebuyers, who must make life- changing decisions with imperfect knowledge of the future. History suggests that it might be wise to avoid investing in too expensive a home or in taking on too much risk.

Yet the value of a good place to live for a family cannot be quantified. If you can afford the cost, a house that you will live in for years to come may be worthwhile, regardless of the short-term shifts in the market.” He continues: “People’s decisions are driven by emotion not rational calculation.”

The real estate community postulates that value is whatever two people – a buyer and seller – agree to. I’ve never bought that argument. What if one party has more knowledge than the other? That argument is a “get out of jail” card for agents not wanting to accept responsibility.

It sometimes takes people awhile to understand why Homebuyer Associates is different and people often ask, “How are you different? My reply, “We are real estate agents who are honest about who we work for.”

We work with our buyers to make informed – not emotional – choices. This is critical in today’s market where home purchase prices are very often exceeding asking price. I’m not suggesting exceeding asking price is a bad thing in a market with low inventory and 3% mortgage rates (see Shiller). I am suggesting an uninformed choice may be harmful to a buyer.

When we prepare a written market analysis of a home’s value, we tell our clients what we think the home is worth based on recent sales; how much they may have to pay to get an Offer accepted and how long they may have to live in the home to see a return of equity. There is no other real estate company I know of that takes this approach. Too often traditional real estate follows the “you can’t lose on real estate” approach. You can lose.

Paying $5,000 more than asking price is one thing if the asking price is correct. If the asking price is $10,000 over value, the overpayment is $15,000. Information/emotion.

Homebuyer Associates was built on the premise of representing and educating homebuyers, but in this environment, more than ever, education becomes a larger part of our mission. The stakes for homebuyers are too high.

Recently a Homebuyer Associates’ client wrote:

“Working with Homebuyer Associates has been such a great pleasure. It has put us at ease and kept our confidence high throughout the process with all the experience and information you bring to the table.

Working with Homebuyer Associates has not only given Emily and me the tools and information to make an informed decision about attempting to purchase a home, but also prepared us for the actual act of successful home ownership.”    

– Andy/Emily Stigen

Yvon Chouinard (Patagonia) was once asked, “How do you market?” He replied,

“We tell people what we do.”

        Enough said.

Thanks for reading,
Michael D. Holloway

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