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How Much Is Your Reputation Worth? (aka KARMA BABY!)

Glenn Schworm
4 min read
How Much Is Your Reputation Worth? (aka KARMA BABY!)

A few months ago, we were negotiating for a house to buy, renovate, and sell.  It needed a ton of work and was in a borderline neighborhood.  My team negotiated the deal to the point where it made sense for us to go and look ourselves.

It was a family house that became a rental without any rent coming in.  Hence the tenants did not take good care of the property.  Worse yet, the tenants thought they knew about construction.  The man walking us around was so proud of the work he had done thus far, which included removing a load bearing wall without adding any supports!  It was so bad it was scary!  It would have been better if he just left it alone!

Worse than that, he (tenant & contractor extraordinaire) was so intoxicated that just being near him, smelling his breath, made me have a blood alcohol level well past the legal limit!!  It was pretty bad!  I was staring to understand why everything was so crooked in the house.  I am pretty sure it looked level to him!  I really wanted to give him a Tic-Tac!  But I digress.

Is The Money You Pocket Worth Your Reputation?

After many weeks of negotiating, things were not going well.  The family selling to us was not very forthcoming.  Why do people that have liens on their properties, think that if they don’t mention it, we will never find out?  Amazing!  More and more liens kept popping up.  The sellers agreed to bring money to the table to sell the house to us, so we stayed in the game.  At this point we decided to wholesale the house instead of rehab it.  We found our buyer.   At the end, days before closing, we found out that another lien was actually days away from foreclosing on the house.

The buyer we found for the wholesale was very clever.  He and his attorney realized it was going to foreclosure so they dragged the closing out in order to cut us out of the deal, even after all of our time, lien clearing, negotiating, and energy.   You know how we found out?  We showed up at the foreclosure auction prepared to buy the home and then resell it to our buyer.  Well guess who we met there?  You guessed it, the buyers attorney!  It took a lot of conversation to even discover who she was.  When we figured it out, we knew they were there to cut us out of the deal and pocket a few thousand.  If that was their intention they should have been up front and not just drag out the closing to cut us out.  In my opinion, that’s a bad reputation to have in our industry.

People think they can save a few thousand, but do they?  What they don’t realize is that that money is far more costly in the long run.  People will get to know very quickly that you are not one to be trusted.  We were very polite at the courthouse.  The funny part is that the auctioneer never showed up so we had plenty of time to talk.  I wished them well and much success on their property.  After all, what was I going to do?  Be nasty and let him know how slimy I think they were for doing this to us?  That’s just not my style.  I believe strongly that what goes around, comes around.  I put it behind me and never thought about it again.  I figured it was just not meant to be.  I even sent the attorney a card and let her know it was nice to meet her and to let me know if any deals crossed her desk.  When people operate in this manner, they are not thinking long term.  They are usually one or two hit wonders in our world of investing.  So I make all the friends I can along the way because I want people know that we are here for the long haul.

Karma Baby!

Last week a tornado hit our town.  We live in Upstate NY, where we have snowstorms, NOT tornados!!  This was a shock to all of us.  It was not as bad as the ones in Oklahoma, but for us it was pretty intense.  It was a mile wide and traveled for 17 miles, leaving behind a lot of damage in it’s path.  It was literally less than a quarter mile from our home.  For the first time in my life I was in the basement with my family during a storm.

I was speaking to our roofer the next day.  He said, “Glenn did you see the house that you had me look at a while back?  It was hit by a tree and the roof was destroyed!”  I said, “Really?  I will do a drive by!”  Here is what I found.


Sure enough, the tornado ripped out hundreds of trees and this was one of them.  All I could think was, Thank God I did not purchase this house!!  I have no idea if this investor had insurance or not, but I couldn’t help but think two words … Karma Baby!  Please understand, I wish no one any ill will, nor was I happy a tree fell on the 100 year old slate roof.  Again, it’s just a philosophy I live by … What Goes Around, Comes Around.  I’m glad this is not my problem.  We have 8 houses that were in the path of the tornado.  The worst that happened to us was a tree fell down that destroyed an above ground pool on a renovation we are working on.  Since pools are a pain anyways, it was a blessing!  Good Karma coming back to us?  I would like to think so.

Deep Thoughts by Jack Handy

(Am I dating myself with that reference?)

The next time you have a situation where you could save money but you know it is not right, ask yourself how much your reputation is worth.  Last week in Sharon Vornholt’s post, a comment was made by Tom Phelan who said he paid over $45,000 to fix a sewer line AFTER the house was sold, even though it wasn’t his fault.  I was very impressed (and a little stunned) and know that many good deals will come his way for that decision.  In my opinion, no amount of money is worth your reputation.  Do the right thing all the time, even when it hurts.  Actually, ESPECIALLY when it hurts!

Tell me some of your war stories. Were you ever cut out of a deal?  Lied to by another investor?  How much money have you lost doing the right thing? More importantly, how much have you gained from doing the right thing?  I would love to hear your comments.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.