Magazine article Real Estate Issues

Sleeping Well While Making a Living

Magazine article Real Estate Issues

Sleeping Well While Making a Living

Article excerpt

"Power without ethics is profane and destructive in any community. While many have come to see that this is so in interhuman ethics--hence the outcries for human rights for justice and charity, for peace--few as yet have seen how the escalating human use of the world, unchecked by any ethic, prevents us from appreciating values on the earth where we reside. The outcry for a life ethic, a land ethic has only begun."

Holmes Rolston, III

With integrity now in the forefront, those of us in the real estate industry are constantly being confronted with ethical issues and how to deal with them. In a desire to be honorable and at the same time not paralyzed by the perception of impropriety, real estate professionals are being forced to make tough decisions. The ethical route can be viewed as either an obstacle to overcome or a standard to follow.

How the real estate counselor approaches ethical behavior in his practice is a very personal thing. The Counselors of Real Estate has established ethical standards of professional behavior which all of its members are required to follow. However, the manner in which each member abides depends upon his individual personal experiences. Becoming professional does not make us automatically honorable. We have to focus on the challenge with every assignment.

THE GOLDEN DILEMMA

When we do unto others as we would have them do unto us--we are acting ethically. Unfortunately, the golden rule, though self-evident, is a tough thing to apply in practice. Depending on what the Counselor is doing, it may or may not be possible to advocate a client's position the way the client would like it advocated. When a real estate counselor is hired to help the client, he should not be expected to lie, cheat, steal or fib, trick or pilfer. Absolute moral duties are the standards within the real estate community. You cannot be half-ethical.

Ethical practice for the real estate professional presents a perplexing challenge. The professional is expected to serve the client and the public in an honest, selfless way and at the same time remain in business. However, for some real estate practitioners ethics is not natural; honesty requires conscious thought. How would you respond to the following scenarios?

KNOWLEDGE EQUALS NO COMMISSION

Think about the broker who recommends to his client not to invest in real estate until the prospects are better. How many brokers separate knowledge of negative market trends from a need to make a living?

KNOWLEDGE POST MORTEM

In commenting on the obvious market softness in 1993, a spokeswoman for the Chicago real estate brokerage community said, "It's no wonder--with all these people paying big prices in the 80s, the bubble was bound to burst." If the market fall was predictable or "no wonder," did those in the profession have an obligation to inform the public of the danger? Should the individual practitioner in 1989 have told his client that prices were far outpacing achievable rents and/or availability of debt capital?

GUARANTEE BUT DON'T BOTHER ME

Those who lend or develop are also faced with tough decisions. We are experiencing the final chapter in the biggest bust in the history of real estate--the Resolution Trust Corporation sell-off. Years of de facto unregulated lending by institutions offering federally guaranteed savings made it possible for even the most incompetent and dishonest to prosper. Panic set in once it was realized that the underlying real estate assets were woefully inadequate to secure the hundreds of billions of dollars circulating in the market. A lack of ethical behavior by every sector of the real estate community combined to create the crash. The thrifts needed to lend money to survive and the opportunistic developers needed to get as much money as they could. Collateral lost its meaning and the taxpayer ended up indemnifying the savings and loans in a helter skelter environment. …

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