Ethical values in real estate business

[rodneyowens]

Everyone talks about hammering sellers to get the best price – about getting every dime you can out of a transaction. Last week a friend of mine was bragging about how he got this old lady to sell her house to him at 50% of it’s value! He’s going to make a big chunk of money on it too. Here’s my question, HOW DOES HE SLEEP AT NIGHT Maybe I’m just “too nice” and maybe I’ll always be just a working stiff, but I don’t want to do business that way. It seems like to be an investor, you have to be a real shark these days. Does anyone do business in way they wouldn’t be ashamed tell their Mom or their kids about?

 

[Martha]

Where are you coming from Rodney? Kind of odd for a first post. I almost feel like you are asking people to share their scams with you for some nefarious reason. Sorry if I am off base, but a clarification would be appreciated.

 

[RedHawk]

Last week a friend of mine was bragging about how he got this old lady to sell her house to him at 50% of it’s value

The value is what someone is willing to pay or willing to accept. Could it be the lady got 100% of its value?

 

[tryan]

Yeah if the deal didn't work for both the seller and buyer it wouldn't happen.

Also if he's talking about 50% from the 2006 highs .... that's current market value in many places - he may have paid full price (or even too much!).

 

[unclemick]

Sooooo - Rodney - if you beat the crap out of this guy and take in the little old lady:

Will you sleep better? .

heh heh heh -

 

[cute fuzzy bunny]

Sounds like a job for thefed.

Someone fire up the fedsignal.

 

[CuppaJoe]

....a friend of mine was bragging ... HOW DOES HE SLEEP AT NIGHT...I don’t want to do business that way.... Does anyone do business in way they wouldn’t be ashamed tell their Mom or their kids about?

--
If you think s/he is unethical, is this "friend" about to make the transition to "former friend"? The answer to your last question is YES! I just ended my working stiff days w*rking for a small business owner who is totally ethical; I gravitated toward that over a lifetime, in both business and personal friendships.

 

[Leonidas]

Sounds like a job for thefed.

Someone fire up the fedsignal.

I copied the fedsignal. Never know when we might need it again.

 

[harley]

I copied the fedsignal. Never know when we might need it again.

Laugh-a while you can, monkey-boy.

 

[Leonidas]

Laugh-a while you can, monkey-boy.

It'a makes the ganglia TWITCH!

 

[Marquette]

A fair market value is often an estimate of what a willing buyer would pay to a willing seller, both in a free market, for an asset or any piece of property. If such a transaction actually occurs, then the actual transaction price is usually the fair market value. Note that the opinion of people that are not interested in buying or selling an asset has little meaning, because they are not active in the market. Thus, "market value" (which is the same for everyone in the market) is not identical to the "intrinsic value" that different individuals may place on the same asset based on their own preferences and circumstances.

Fair market value - Wikipedia, the free encyclopedia

Assuming the seller was in full use of her mental facilities, and assuming both parties were willing (not under duress), then the price they agreed to is a fair price for the house. While one side may brag about how good of a deal he got, the other side may actually be bragging to her friends about how she got some schmuck who thinks he's a hotshot up to her asking price.

 

[cute fuzzy bunny]

I copied the fedsignal. Never know when we might need it again.

I knew I should have trademarled that. I was trying to work in a crowbar or a pair of handcuffs or something but I just lost interest.

 

[chinaco]

Real estate is relatively illiquid. If one needs to sell in a hurry... they are probably going to get scr3wed.

It is a legitimate transaction. But it is also a bit sickening... feeding on someone that is disparate and hit on hard times.

Yes the scoundrel probably sleeps at night. He does not view it as shameful... or he would not be bragging about his exploits.

However, bragging about it is not likely to win many friends or fans.

So now that you know what the $h!thead is made of... is he still a friend or some @$$h0le you know?

Personally, I would move him into the category of people to avoid. I probably would not chastise him... But I would use a veiled way present the thought in a way that delivered the message. Something like: "wow, that poor elderly woman must have been desperate. If she took the low-ball offer... she must been have really been having hard times. It sad to see someone have to give up their home when they are in a crisis."

He would get the message. He is showing a sign of lack of character. It would distance myself from him. Who needs acquaintances or friends like that.

 

[haha]

Personally, I would move him into the category of people to avoid. I probably would not chastise him... But I would use a veiled way present the thought in a way that delivered the message. Something like: "wow, that poor elderly woman must have been desperate. If she took the low-ball offer... she must been have really been having hard times. It sad to see someone have to give up their home when they are in a crisis."

He would get the message. He is showing a sign of lack of character. It would distance myself from him. Who needs acquaintances or friends like that.

A lot of old people are just tired. Their husband or wife is dead, their kids may be neglectful or at least not respectful. The process of getting a house ready for sale can be overwhelming, and bringing one’s self to sort through and sell or throw out the accumulations of a lifetime can be depressing.

Some people might just bolt and be done with it.

I don't know anyone like this buyer, but I have known younger couples who befriend an older person at church or in the neighborhood, and do manage to get a good price on a house that they want to buy and occupy. IMO, a lot depends on the character of the buyers. If the old person needs some help in return, will they give it? One thing the old find out fast is that connections can be more useful than money, unless one has an awful lot of the latter.

Ha

 

[cute fuzzy bunny]

He is showing a sign of lack of character.

It shows character to pay more for something than someone is willing to sell it to you for?

I've certainly given the business to plenty of sellers over the years. My job is to get the best deal I can for my family. Their job is to decide whether or not to sell it to me for the offered price.

Now if this "old lady" had issues that kept her from making a good decision, then he's a bit of a scoundrel. But where is her family helping to prevent her from doing stuff like this? Should we tie this to the thread about what people are doing to avoid the situation where they have to make financial decisions when they're unable?

This door swings both ways, btw. I was ready to buy up a half dozen rental homes in the area about 12 years ago. I looked at a lot, made an offer, got a deal, arranged the financing and inspections, and then the "old lady" backed out just a few days before the closing. My agent said I could make an issue out of it and probably force the sale, but that I'd look bad suing gramma in court. With this bad taste in my mouth I decided to wait awhile on moving forward with the other properties. Rates went up. The cash flow wasnt going to work as well. Then the home prices went up.

Had gramma sold me the house, I probably would have gone ahead and bought the other five. Even in this 'horrible downturn' they're all worth more than twice what I'd have paid for them, and the rents have gone through the roof.

 

[chinaco]

It shows character to pay more for something than someone is willing to sell it to you for?

Of course not. Investor take risks and gain or lose.

Opportunist swoop in for the kill. It happens all the time.

My interpretation of the OP's post was that the investor knew he took the old woman. Picked it up for 1/2 its worth.

If that is the case... I would not choose to have the jerk as a friend. With friends like that who needs enemies.

Unless the OP overstated the situation. You have to admit it stinks a bit.

 

[cute fuzzy bunny]

My bet is that 50% of the half price is BS and another 50% of the half price is stuff the buyer doesnt know about yet.

The "old lady" probably hasnt done any maintenance on the house in ten or fifteen years.

The 'scammer' might be the 'scammee'.

 

[chinaco]

You might be correct.

The braggart may have been taken. Talking up his "Great Deal". He may have just purchased a termite infested 50 year old home.

On second thought.. beware of sly old codgers in real estate deals.

 

[kcowan]

A good friend bought his house from a little old lady for just the cost of the lot. She said that they were a lovely young couple and she wanted them to enjoy her little cottage and garden. They lived in the drafty cottage with crooked floors and leaky roof for five years before building their new house.

The big double lot turned out to be worth a significant amount in the long run. But at the time, the cost of the double lot was as much as a nicer house on a single lot. He never bragged about his conquest but claimed they were very lucky to be able to buy so much land and defer the cost of a house.

 

[tryan]

hmmm ... I've haggled with banks and picked up REO's for way less than 50 cents on the dollar owed. I sleep just fine.

Not sure where to draw the line on this one.

 

[growing_older]

I bought a house from an old lady once. She had multiple offers and picked mine (not the highest) because I was a nice young man. It didn't bother me and it wouldn't have bothered me if she'd chosen someone else.

If on the other hand, someone had lied to a nice old lady and convinced her that her house was worth less and she had to dump it soon or she would lose even more, or made some other misrepresentations to take advantage of her, or somehow got her to sign something not in her best interest due to her diminished capacity, then that seems to me to be unethical and probably illegal under some idea of fraud.

 

[Nords]

Last week a friend of mine was bragging about how he got this old lady to sell her house to him at 50% of it’s value! He’s going to make a big chunk of money on it too. Here’s my question, HOW DOES HE SLEEP AT NIGHT

Sounds like the plot of the movie "The Money Pit".

Where are you coming from Rodney? Kind of odd for a first post. I almost feel like you are asking people to share their scams with you for some nefarious reason. Sorry if I am off base, but a clarification would be appreciated.

Maybe Rodney or some other new member has a followup website that could help us out while the moderators are checking IP addresses...