7 Principles of Personal Ethics that Will Improve Your Real Estate Success

In the fast-moving world of real estate investing, it won’t take long for both old and new real estate entrepreneurs to quickly come face-to-face with personal dilemmas that may test their moral principles.  Upon closer examination, the answer to those questions about right and wrong may tend to seem more gray than just black and white.  How you, as an aspiring entrepreneur, act when business and investment decisions don’t appear to have a consistent answer will determine how successful your real estate career will become.

Every act, every decision, and every interaction you have with sellers, buyers, renters, investors and fellow entrepreneurs will affect your future real estate success.  Personal ethics are generally defined as the principles and values that govern interactions between individuals, while professional ethics are more accurately defined as the rules that govern behavior within a certain profession.  Because real estate success will ultimately depend upon the interaction between individuals within the realm of property ownership, management, and personal use, we will treat the comprehensive list of values and understood rules to all fall under the banner of personal ethics.

Your goal as a real estate entrepreneur is to achieve success that will provide both short and long-term benefits.  There are at least seven specific personal ethic principles that will impact and improve your real estate investment career.  Your business reputation will depend on how well you learn and then apply these principles.

 

Personal Ethic Principle #1 – Honesty

Honesty seems easy to define.  From an early age, we are taught to tell the truth and not to lie.  Unfortunately, as we grow older we seem to find it much more difficult to accurately explain and live the principle of honesty.  Let’s consider the example of selling a rental property that has old appliances that will probably need extensive repairs or even replacement in the immediate future.  Do you ignore that future possibility or just rely on the fact that the appliances are working pretty well right now?

It’s important to realize that you will continue to own, sell, and lease properties in the local area for quite a long time.  If you omit or fail to disclose information about a property you are selling, that fact will become local knowledge and your reputation will be damaged in countless ways.  People talk and they love to express their displeasure when they feel they have been wronged.

You should attempt to be completely honest in all your business dealings, and that is doubly important when buying, selling, or leasing real estate.  Being truthful in all your business dealings implies that you won’t knowingly mislead, omit or deceive another party.  When you are honest in your real estate dealings with another individual, you will gain new friends and establish a reputation that signifies that you can be trusted completely.  You will find that people will come to you with deals because they know that you are Honest!

 

Personal Ethic Principle #2 – Integrity

A person of integrity is believed to be an individual who has high moral values and who will not sacrifice personal principles for some kind of monetary reward.  As a real estate investor, you will always want to be identified as a person of integrity.  You will do what is right even when there may be pressure of some kind to do otherwise.

Perhaps you have decided to fix up a property and flip it for a substantial profit.  First of all, there is nothing wrong in doing this.  When you purchase a property that needs repairs to bring it up to its true potential, and then you use your money, labor and efforts to accomplish the work, you are adding value to the property.  When you sell the property for a profit, you are being compensated for that added value.

Now is when your true integrity will be demonstrated.  Are you going to truly add value to the property, or are you only going to do repairs that are superficial and won’t last?  Hopefully, you will do the fix up work on the property that brings added value.

There may be times when immediate profits without adding value through work, knowledge, and effort is tempting.  Don’t be sucked in to the belief that “no one will know.”  Doing what is right when circumstances and pressure to do otherwise will demonstrate how converted you are to showing integrity in your business decisions.

 

Personal Ethic Principle #3 – Trustworthiness

People will often describe another individual by saying, “He is a man of his word.”  In other words, they believe that the individual can be trusted to follow through on whatever he says he will do.  Real estate is a strange business in that there are often agreements that are made verbally or through written contract.  It is important for both parties to know that when agreements are made, they will be honored.

If you are going to purchase a property, you will certainly want to believe that all agreements you make with the seller will be honored, and this is even more important when you become the seller of a property. Both parties to every transaction must have confidence that the other party can be trusted to follow through.

But true trustworthiness in real estate is much more.  It’s a demonstration that all relevant information will be disclosed.  As a buyer, you are relying on candid information about the property, and when you are the seller, you are relying on honest and truthful representation as to the ability of the buyer to purchase the property.  If you subsequently find that you have provided information that is inaccurate, you need to alert the other party as to the error.  Failure to do so will result in loss of trust, and when trust is lost, the transaction will fall apart.

Successful real estate entrepreneurs have found that long-term success is largely dependent on establishing trusting relationships.  These personal associations will provide a contact list of ongoing buyers and sellers that will provide long-term income and success.  One way to ensure that these relationships mature into profitable ones is to demonstrate trustworthiness from day one.

 

Personal Ethic Principle #4 – Loyalty

Loyalty is defined as a strong feeling of support or allegiance.  As a real estate investor or entrepreneur, you will be engaged in numerous situations where the other party is dependent upon you.  They will depend upon you following through, but there is much more.  Your ability to guard and maintain information in a secure manner is crucial to your success.  Take the example of renting out a property and receiving a credit report for the new potential client.  That information is certainly private and you must not reveal it to others.

In addition to guarding private financial information, you need to demonstrate loyalty as you follow through on your commitments to others.  If you say you are going to be at a property showing or open house of the seller, you need to be there.  Missing a pre-arranged meeting will demonstrate a true lack of loyalty.

Another way to ensure that you show loyalty to other individuals in your real estate transactions is to avoid conflicts of interest.  If you find yourself questioning whether there is a conflict of interest, point it out to the other party and you will be safe.  Once the information is available to everyone, it’s easy to work out a solution.

Loyalty in real estate can also be described as faithfulness to commitments.  People will trust in what you say and what you do.  Their trust in you will increase when they understand and have confidence that your word is your bond.

 

Personal Ethic Principle #5 – Fairness

It’s very likely that people will ask, “How fair is he?”  They may be potential renters asking existing tenants, or sellers who are interested in some kind of joint venture.  It doesn’t matter the exact situation, people must believe that you are fair or impartial in your business dealings.  If your reputation is one that defines you as fair, you are well on your way to developing a long list of potential business contacts.

If you are interested in fixing up properties as part of your real estate investment program, you will quickly find that you need to involve contractors and other business people.  Regardless of the type of economic real estate market we experience, these individuals will only do business with individuals like yourself if they have the belief that you are always going to be fair with them.

Additionally, you will want to make sure that when you discover you’ve made a mistake of some kind, that you correct the error and make amends.  If you discover that you’ve unknowingly given false information that led to a mistake, you must make the other party whole.  Fairness is something that contributes to either a positive or negative reputation, and long-term, you are dependent upon a strong positive reputation based on fairness in business dealings.

 

Personal Ethic Principle #6 – Concern for Others

The Golden Rule is defined as “do unto others as you would have them do unto you.”  In real estate this could be interpreted as having concern for others.  In simple terms, you want to ensure that you do win/win deals and transactions.  When both parties to a real estate business contract come out ahead, it is called a win/win deal.  Start by imagining that the other party is in reality your customer, and then put yourself in your customer’s place.

If you truly have concern for the other party, you will make sure that you help them understand the transaction.  You would never want to subtly hide information in a contract that would adversely affect the other person.  The more open you are in your real estate negotiations, the more success you will have.

People will trust you and want to do business with you if they know that you are concerned for their outcome.  One way to demonstrate this concern is to have the person like you for being fair and honest.  Your body language is important in establishing this feeling of mutual trust where your concern for them is evident.

SEE ARTICLE: (Link to article written by Gary Cochran “4 Factors Every New Real Estate Entrepreneur Must Understand About Positive Body Language”)

 

Personal Ethic Principle #7 – Personal Accountability

Personal accountability is the belief that you are fully responsible for your own actions and consequences.  In real estate investing, this means that you will take full responsibility for the outcome of your transactions.  If you somehow create a hardship of some kind for the other party, you will make it good.  You will always assume that there are two sides to any disagreement and then be open minded about solving any potential problem.

Real estate entrepreneurs across the globe have found that their performance and success increase when they assume responsibility and don’t blame others for mistakes and small setbacks.  There is little doubt that real estate investing sometimes comes with short-term disappointments.  When they occur, evaluate the reasons and examine how you can improve your business.

Warren Buffett is reported to have said, “It takes 20 years to build a reputation and 5 minutes to ruin it.  If you think about it, you’ll do things differently.”  A solid business future can await you as a real estate entrepreneur when you learn that making money is a by-product of leading a moral and ethical life.  Focus on the principles of personal ethics and everything else will fall into place.