Property Investing Ethics

[bennett]

Hi everyone,
While I fully agree that we are all out in the marketplace together and in some places competing against each other on occasion (which I have no problem with at all). Is it ethical to be introduced to a property/deal by a property finder, tell ?no? to their deal, then go around their back using all the information given (building inspection, valuation, LIM, vendor?s situation, quotes for repairs, etc?) by the finder and present your own offer behind the finders back???

This was the situation I was in this morning.

I?ve secured a property well under value, offered it to a small circle of fellow investors for a contemporaneous settlement to do up and sell for a neat profit.

One of the investors got very interested and was provided with my inside knowledge as to the vendors situation and all the relevant documents. They declined to accept my deal on the last day (despite getting the property within $ 5,000 of where they said they would buy it) and then armed with all this information went around my back and presented there own offer through a different agent. Needless to say that my agent was p...d off more than I was , because she was about to loose half of her commission after all this hard work of marketing and our negotiations over the past 4 weeks. Moreover my agent was upset to find out that the second bidder had all the documents for the property while the agent had never met them before .

While this property did not fit my current situation and I was not originally planning to buy it myself, I decided that the deal was too good to pass up, so I made my unconditional offer last night. At the point of presenting my offer the agent informed me that another offer had come through. Surprise, surprise????? The offer had come from the previously mentioned investor that I had introduced the property and deal to
Thanks in advance

 

[braden]

Hi Bennett,
I read your post twice. To my mind, this is clearly unethical conduct on the part of the other party. They have used you solely as a means to further their own end, of making money. This is never acceptable.

The problem is: what can you do? When legal rules are broken, there are clear courses of action one can take, and a clear punishment for such acts. (The punishment might vary from case to case, but there is a punishment nonetheless.) But what happens when moral rules are broken (e.g. "do not lie", "do not treat others merely as a means to an end")? What courses of action can one take, and what punishment is appropriate (and who is to administer this punishment)?

I'm a big believer that the most effective sanction against immoral conduct such as that you describe is public disapproval. This being the case, the appropriate course of action would be to name and shame, on this thread. Not only will this (justifiably) tarnish the person's name, but you might well be doing others a service by warning them of this person. And remember, truth is the best defense against defamation.

A lot of people would sit back and thing "what goes around comes around - this person will get what is coming to them". I don't believe in that karma nonsense. One has to take action to make sure that bad deeds do not go unpunished - one has to make what goes around come around. But then I might be more vengeful than most.

But if you're not willing to take this course of action, then the best thing to do (in my opinion) is to look in the mirror and remind yourself that you have not done anything wrong in this instance. Your character is intact.

On a more professional note, have you thought of getting your clients to sign a binding agreement to the effect that they will put their offers through you for properties you have introduced them to?

I hope this experience does not leave you with a bad taste in your mouth - unfortunately there's not really much we can do when others choose to act unethically.
Cheers