Real Estate Investing Ethics

I think investors as a whole have a bad reputation. People think of us as sharks, piranhas, and vultures. They think we thrive on taking advantage of people in distress to better ourselves.

I don’t believe that is true. I see investors as a group of folks who help people out of stressful situations. The people we help have gotten themselves into their situation, and we are there to offer a solution. I truly believe we help the public by offering a wonderful service.

As with any industry, there is always one bad apple in every barrel. It stuns me how many investors try to screw each other out of deals. Folks, when an investor sends you to a property, you should not “go around” the investor. If you are the one selling the property, do not steal your investor’s clients.

We have to work together as a team to keep our industry on the up and up. When you hear about an investor who cuts people out of deals, tell everyone you know.

Let me ask you a question: If you attempted to make a deal with someone who at the last minute cut you out of the deal and you lost money, would you have wanted to know in advance that this person was unethical? I am certain the answer is yes. That is why we have to watch each other’s back.

How it’s supposed to work

Here is how it is supposed to work: Let’s say you have a property you are trying to wholesale. Your plan is to call every investor you know to do a drive-by. You know many of these investors are also sending their people by the property as well.

If you put a sign in the yard, the investors who were sent by others can call you directly. If they do, you should ask them how they heard about the property. If you know they were sent by another investor, tell them they have to call the investor who sent them. Don’t cut the investor out of the deal. This person is trying to make a living and is trying to sell YOUR property. Why would you try to steal a client that does not belong to you?

Let’s put the shoe on the other foot. Let’s say I send you to a property that is not mine but is a very good deal. You arrive and see a sign in the yard. You would have had no other way to know this property existed. You decide to call the person directly and cut me out to possibly save a thousand dollars. Why would you do that?

But what happens sometimes

Last month we sent someone past a property. They loved it and did some research to find the owner. They then called the owner directly and cut us out. We were livid when we found out and banned the person was banned from the REIA group. We did receive poetic justice, the deal fell apart at the last minute and didn’t close. Not only did they lose the deal, they now have a VERY bad reputation and will lose many more deals because of greed.

Every property we place on our wholesale list has no sign in the yard. If you send a client past one of our properties you can rest assured that if they like it you can sell it to them and earn your fee. I encourage all investors to do the same. Many times other folks sell our properties for us. Why would we want to cut them out of the deal?

Let’s watch out for each other

If another investor gives you a referral, remember to pay for it. Many times people call us with a property address that they don’t know how what to do with and we make it a deal. We always pay them for the referral.

Folks, we have to watch each other’s back and hope that others do the same. If you are uncertain about doing business with a new person, take a minute to call your local real estate club and see if they are willing to share with you what they know about the person. Trust me, word gets around fast when you do the wrong thing.

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By CREOnline Contributor

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