ETHICS, What Is Expected In Business

29 Replies

I just read a thread where an "investor" suggested that someone way the risk and if the down side could be covered, afford to suffer, to take the less ethical route.

Another thread was suggesting that investors just ignore laws and regulations and just go make money, that the chances of getting caught was slim.

I'm not really the Mr. Law and Order of RE that many may think, but I do hold ethical conduct in business in high regards. Following the rules is the least expected and actually, ethical conduct is to a higher standard.

Here is an interesting short version addressing ethics and law that everyone should look at, if for no other reason, as a reminder of what the public and other RE professionals expect.

http://definitions.uslegal.com/c/code-of-ethics/

Should you have a Code of Ethics on your web site? Should your business display such a public statement? What if you put your company Code of Ethics on the back of your business cards?

How do you communicate to others that you deal ethically? Or, do you?

Some may call it Karma. :)

Bill, I just joined the forum recently and was surprised at how many posts suggest unethical or even illegal activity is okay because you probably won't get caught. I think a lot more people are ethical and point out the flaws in their thinking. Not only did the attitudes surprise me, but do people realize what they say on te Internet can be traced to them and used in court? The HUD post about cheating good neighbor next door program blatantly pointed out that they knew it was fraud but thought they probably wouldn't get caught so it was okay. That is a felony!

Anyway, I am a Realtor and we have to take ethics training every three years. Ethics goes well beyon the scope of the law. Just because something is legal doesn't make it ethical.

My 02 cents. I have not seen anyone who is unethical build and sustain a business (real estate or otherwise) over a long period of time. I have seen many rise and fall and I have seen some unethical kids run the quality business their parents or grandparents built into the ground... but cutting corners and skirting the rules eventually catches up. Nobody is perfect but if you consistently operate in the "grey area", it will eventually bite you.

The importance of ethics in business cannot be overemphasized.

Mark, I saw that you are a broker, again, welcome to BP.

Rightly or not, I put much of the poor attitudes that often pop up here on the gurus, the spin and pie in the sky whiz bang methods of getting rich rather than approcahing RE as a profession, they beome "operators", most fail.

Joe, I see it and anyone who has been around the block has seen it.

Actually it can be very trying at times, taking another step back and looking at the big picture, asking yourself if you're just cutting a deal or if you really are taking advantage beyond that line of fairness.

Your conduct is your reputation and since RE is a social business an outcast just won't make it over the long haul.

And Mark, we have had a few that have explained thier strtegies or methods that are clearly illegal, BP is a treasure trove for authorities. I've pointed this out before, I'm sure that someone at HUD and state agencies is aware we are here. I'm sure when the time is right, those that make poor choices they will pay thier dues. Just give some enough rope to hang themselves

Now, off the negative, what would be great is if some could give examples of situations that come up in RE where there was a choice and the right path was taken perhaps how the right choice paid off in more than just funds at closing.

I have a very simple one. Mortgage brokers use to give sucker rates in ads and anyone who called was given the old low ball rate, common practice. When I got calls, I explained the par rate and the buy downs. I had an FBI agent call and he asked why I was higher and I explained. Initially, I thought there might be some problem since he was an agent, LOL, no, he was calling for his office of agents as many wanted to refi thier homes and since he had a better understanding of finance, he was elected to find the best place.

I could have followed the crowd, offered lower rates and hit them inthe application process, after paying fees to then disclose the estimated good faith, I didn't do that. Every agent in that office came to me to refi. Not only that, but they spread the word to the DEA agents, the Sheriffs Dept. the State Troopers and City Police, over a hundred loans made to law enforcement types in about a six month span during the refi craz in the 90s.

It pays to choose the right path!

I can't think of any monetary gains at the time, but I am sure there are many. I have oral peace of mind which is worth more than money.

The most significant thing I can think of was saving animals from an animal hoarder house. I did a bpo on the house and saw many dogs stuck in tiny kennels, rabbits and cats all over and animal waste all over the floors. I called the police after I saw it an reported it. They didn't seem to concerned so I asked to talk to animal control. The animal control guy said they had a few reports about the smell of the house(you could smell it from the sidewalk 50 feet in front f the home). He said they couldn't do anything about it because they had no proof anything illegal was going on.
I emailed him my pictures and he had the proof. They busted the house and found over 150 animals, many of them dead and most stuck in the basement which I never saw. The best part was an 8 year old had lost her dog about 6 months earlier. They had signs and adds all over but couldn't find the dog. The hoarders had found the dog and kept it! He was alive and reunited with his ritefull owner.

A lot of people would say they would have done the same thing, but the house was for sale for months as a short sale, was under contract ad a short sale and none of the involved parties pursued it enough to get anything done. There was an article in the paper about it and I asked not to be mentioned by name.

Something to keep in mind in regards to trying to encourage ethical behavior in the RE community is that many laws and regulations that seem unfair and onerous came about when government finally stepped in to address shady or unethical behavior. Given that they typically address problems in a very broad way, it's in our interest to self-police.

Good reminder, Bill...

Everyone has their own definition of what is ethical and what is not, but I liken unethical behavior to the cliche definition of pornography -- "You know it when you see it."

As Ben indicated, self-policing is good not only for the industry as a whole, but for each of us individually, as the laws made to protect our clients often can hurt our business.

Had a sociology teacher that said ethics is an invention by people who have full stomachs that want to keep things that way.

Lots of people in RE who aren't very good accuse those who are successful of being unethical. This is simply sour grapes. Usually when you hear people talking about ethics they are bad mouthing someone else because they are losers and don't have much else to do.

Do no harm is the best motto. Don't slander others and worry about your own ethics. If you do that everything will work out for the best.

Originally posted by J Scott:
Good reminder, Bill...

.....but for each of us individually, as the laws made to protect our clients often can hurt our business.

Agreed, and those in the business having failed society and the public good have brought such laws upon ourselves.

IMO, not only do we have to watch our own conduct and attempt to hold ourselves to a higher standard, but you also have a responsibility to educate others and, at some point, ensure others meet higher expectations.

Not long ago a survey was taken here concerning various professions and how the public viewed them. Doctors and teachers faired well, insurance and stock brokers passed, but Realtors came in behind used car dealers and only beat out telemarketers. Real estate "investors" weren't considered, but landlords and such are usually lumped with Realtors.

Anyway, that's a poor showing for public perception. It only takes a few to drag down all the others.

@Bill Gulley so you're telling me that what I'm doing in screwing blind old ladies out of their equity is unethical? And here I thought I was helping someone you know ME :)-

Seriously though. Why be unethical when you can build up a reputation as someone that is not only ethical and lawful but a champion in his/her community in the eyes of the masses.

Yes, I can take a joke, I see Jeff is already defensive, but it is true, ethics and ethical behavior is established by society, the norms to which we abide to to treat all members fairly, it also applies to those with full stomachs. As to sour grapes, I'd say it's the other way around, those who can't operate ethically justify thier unethical behavior as it being unfair, perhaps even agaisnt free enterprise, I can see that as a conservative approach.

Actually, it's not "do no harm" but "I will keep them from harm and injustice" if you meant to refer to the hippocratic oath. :)

It's a set of values adopted, a higher standard than law it not only protects you from others but also from yourself. :)

There are those that talk about it and there are those that live it. Those that live it rarely talk about it.

How many honest people do you know that proclaim themselves to be honest? They don't need to.

Calling your competition unethical is as old as the hills. Do you need to talk about your ethics or do you need to establish a good reputation?

If you are a Realtor you have a code of ethics that you can be judged by. Mentioning this is a good business practice as it sets the bar a little higher than for the standard agent.

I know some dishonest business people who are surprisingly successful and have been for a long-time. We wish dishonest people didn't get ahead but unfortunately many do.

The only way to show you are ethical is through your actions. I've done business with several RE people who claim to be but their actions tell another story. A few of those are BP members. So just saying you are and posting a rosy picture does not really do much. It is part of every business to deal with unethical people, you can choose which path you want to follow. There are many discussions about this in MBA courses on whether "Being Ethical Pays".

I like how @Bill Gulley doesn't sugar coat stuff around here. I mean we need more people like Bill telling everyone on the right ways to invest in RE and keep those from doing the wrong thing so that they won't get into hot water with the law.

Ethics is not only the right way to do things but it keeps you from getting into trouble PERIOD.

Well, James thanks. Others are right, part of your being ethical is dealing with others, all you can do is set an example in your dealings and show thier tactics or actions weren't necessary.

Reminds me too of the quote by someone who said something about "when a christian uses his faith in business, I hold on to my wallet" something like that.

I'd think if you appoached someone and began professing your honesty and high ethical paths, they would run away....rightly so, and there is no need for talking the talk, just walk the walk.

In every community I would imagine there is at least one who may be considered well off, or at least financially set and is known tobe shady or unehtical. You know, I have known such men.

Most here I doubt ever think about or realize how you will be viewed by other in your community or give much of a care about your reputation. When you figure out that philanthropy doesn't really buy you your reputation and that money can't change opinions, you will probably wish you had done things differently.

What is discussed in business ethics may flow with the value of the decission in monetary terms, the time required for the public/market to forget or forgive and continue to march. Look at Wal-Mart luring small manufactures in, loading them upwith orders, having them expand and then pulling orders placing them financial peril and then buying them out, just one exampe. I can also tell you that one of the Walton's is really a lonely drunk despite her money. Seems at the large corporate level, where no individual is seen to blame, unethical conduct is accepted as it is reality. It only becomes a social matter when the conduct is by an individual,

And, chances are very good that if one is unethical in thier dealings in RE, chances are very good they have violated laws as well. Seems there is always a law or regulation lying around that can be dug up and applied to some unethical operator to put them out of business, society will tend to police its own to order. :)

Originally posted by James Hiddle:
I like how Bill Gulley doesn't sugar coat stuff around here. I mean we need more people like Bill telling everyone on the right ways to invest in RE and keep those from doing the wrong thing so that they won't get into hot water with the law.

Ethics is not only the right way to do things but it keeps you from getting into trouble PERIOD.

Yeah... It's just too bad he feels the need to throw jabs at Conservatives and Christians in the process.

Originally posted by Randy F.:
Yeah... It's just too bad he feels the need to throw jabs at Conservatives and Christians in the process.

I'm a Christian and more conservative than most think.

I was at car dealership and overheard a local pastor trying to cut a deal, saying that if the dealer would donate the car to the church he could throw in the tax benefits for the dealer. For his personal car, a Caddy no less. Now, that's what I'm talk'n about! He's not my pastor! :)

Originally posted by Bill Gulley:
Originally posted by Randy F.:
Yeah... It's just too bad he feels the need to throw jabs at Conservatives and Christians in the process.

I'm a Christian and more conservative than most think.

I was at car dealership and overheard a local pastor trying to cut a deal, saying that if the dealer would donate the car to the church he could throw in the tax benefits for the dealer. For his personal car, a Caddy no less. Now, that's what I'm talk'n about! He's not my pastor! :)

There are definitely bad apples in every bunch, and while they dont spoil the whole bunch, they do get their stink on all the others. Self-policing is great in theory, but if ones moral compass points to "due ME" instead of "due north", they likely wont get it until their actions come around to bite them in the "due south"!

Originally posted by Bill Gulley:
Originally posted by Randy F.:
Yeah... It's just too bad he feels the need to throw jabs at Conservatives and Christians in the process.

I'm a Christian and more conservative than most think.

I was at car dealership and overheard a local pastor trying to cut a deal, saying that if the dealer would donate the car to the church he could throw in the tax benefits for the dealer. For his personal car, a Caddy no less. Now, that's what I'm talk'n about! He's not my pastor! :)

What the church of satan lol :)

Now, now, he who is without sin, cast the first stone! Nothing wrong with tossing a little dirt to get ones attention.

While many bring thier level of ethical expectations along side thier religion, they are not necessarily the same at all. Closely related, such as giving an honest days' work for an honest days' wage is ethical and biblical. Giving false testimony against another is unethical, against biblical teachings and can be unlawful.

But, for example, saying an agent deals unethically may be true, but is unethical under the Realtor's Code of Ethics, unless you have proof and are bringing the matter before an ethics board. This reminds me, I should be more attentive to things said about some gurus, maybe, perhaps.....naaah, never mind.

Randy is right on, it's a moral compass, what is expected in dealing with others. :)

Originally posted by Bill Gulley:

Most here I doubt ever think about or realize how you will be viewed by other in your community or give much of a care about your reputation. When you figure out that philanthropy doesn't really buy you your reputation and that money can't change opinions, you will probably wish you had done things differently.

Hey Bill -

Just wondering what you meant by this? Did you mean in your town when you said "here"? Or did you mean on this thread? Or did you mean on Bigger Pockets? I love so many of your responses, but this one threw me for a loop. I couldn't figure out how you were able to determine that most don't care about how they are viewed or their reputation. Maybe I just like to hand around or communicate with different people, but many people that I have connected with on BP seem to be concerned about their business practices, the longevity of their business and definitely the way they are viewed by their clients and their peers. I haven't met too many on here who are not. Then again, it is a big site.

I was also wondering which posts that Mark Ferguson is reading to say that he is surprised at how many suggest unethical or illegal activities and then say that it is ok because you probably won't get caught. Granted, I do not read every post and this forum site has gotten so big that I am only seeing a fraction of it now, but I have rarely seen advice that is illegal or unethical. When I have, I have seen some great posters on the forums jump right in and let them know the mistakes they are making or how bad their advice is.

@Chris Clothier , I have only been on the site a very short time and two of the posts really supise me. The worst was http://www.biggerpockets.com/forums/311/topics/78741-good-neighbor-next-door. Basically someone wanted reassurance it was okay to buy a Good neighbor next door property as an investor.
The other thread http://www.biggerpockets.com/forums/93/topics/64403-can-i-advertise-a-house-for-sale-that-i-just-put-under-a-purchase-contract-. Seems like common sense to me that you can't advertise a house as for sale when you don't own it yet.

Just to be clear, in no way do I think most people on the forum are unethical. I think there are very few who are unethical, but what was really suprising was the ease that someone would admit they want to commit fraud, in writing, in front of a lot of people.

Chris, I'm only saying that usually, IMO, based on my years, that younger people don't think much about what thier reputation will be when they leave this world. I'd say, most BP members are on the younger side of the working/investing population. I know when I was starting out I was not clear on what was ethically and professionally acceptable except to the point of knowingly pulling a fast one, there was a moral foundation, but certainly not a professional level of ethics as I was not a "professional" starting out, no one is.

Then, if one did trash thier reputation and has money from ill gotten gains, you can't buy your way out really. I knew a very wealthy guy, about as unethical as you could get, tried for killing his competition (murder). His family would have nothing to do with him. He gave money to the college and has his name engraved in stone, people spit on it and deface it. Everywhere he went he had body guards. In my mind, he was no winner. Just saying when the reputation is gone it's hard to get it back, even if you can. People have very long memories. While his kids have money, they also put up with being the son and daughter of so-and-so, I bet they wish they had a little less money and had thier father held in higher esteem. :)

Specifically, I think most everyone on BP are good folks, some very good but I have noticed a few that I suspect as bad apples, but that is expected in anything. I think there are many that are simply unaware, not that they want to do something wrong, they just haven't found out yet...we have all been there at one time or another. :)

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