Integrity.
It’s not a word you hear a lot nowadays, and when you do, it’s usually used to sell something. However, integrity is crucial in real estate. Whether you are buying or selling, renting or managing, appraising or inspecting, acting with integrity makes the whole system run.
Most people will agree with this sentiment in theory. But in practice, when there is an opportunity to fudge something ‘just a little bit,’ the majority will take it. We see this in a thousand small ways. The landlord who ‘forgets’ to mention that the shower will only stay hot for ten minutes. The renter who breaks an appliance, but stays silent, so they can get their full security deposit back. The home seller who doesn’t fix the electrical system, but installs three-prong outlets to make it ‘look right.’ The home buyer who adds a few months to their work history in order to secure a better rate on their mortgage. The list goes on and on.
Why We Do This, and How Far We Go
The why is relatively simple. Frankly, there is often a short-term benefit in acting without integrity. Perhaps you make a bit more money, get a better deal, sell your home faster, or keep someone ‘important’ in your good graces. Whatever the case, there is almost some incentive to cheating.
How far we go is more fascinating. Many assume that people decide how much to cheat based on a logical calculation. A balance of risk vs. reward, with maybe some moral dilemmas thrown in there.
However, According to research by Dan Ariely, author of The Honest Truth About Dishonesty: How We Lie to Everyone–Especially Ourselves, it goes deeper than that.
According to Ariely, the vast majority like to see themselves as good people. As a result, people tend to bend their morals ONLY to the degree that they can rationalize or ignore it later. This allows people to people to maintain a positive self-image while still getting some of the benefits of cheating.
Here’s an example. John would never $200 in cash from their property manager’s safe, even if he found it wide open. ‘No stealing’ is black and white in his mind, and he wouldn’t be able to still think of himself as a good person if he just grabbed the cash.
However, John is fine with staying silent about a $200 window he broke during a party. After all, the property manager was kind of a jerk last month, and the apartment complex probably makes plenty of money. He chooses to rationalize his decision away, and convince himself that this ‘isn’t the same thing.’
Integrity is crucial in real estate… don’t let the small things trip you up.
The Point of No Return
Many people view these decisions as isolated events. Choosing to add an unnecessary fee to a tenant or exaggerating how much money you made to your mortgage broker feels like a one-time incident.
However, according to Ariely, there is a compound effect with integrity. If we stay true to our principles on Tuesday, we’re more likely to make an honest choice on Thursday. Doing the right thing feels good, and each high-minded decision strengthens our willpower for the next moment that will test our morals.
The opposite is also true. If you make a decision to act without integrity, your brain will work hard to rationalize it. Remember, we all want to see ourselves as good people. Your mind will give you SOME justification for your action (“They’re rich, they won’t miss the money,” etc.). If you do this once, you are much more likely to do it again. You have both received the ‘reward’ and rationalized away the mental strain, so it becomes easier for your brain to make a similar choice next time.
Unfortunately, this snowballs.
At some point, after repeated instances of cheating, your mind will quit even attempting to rationalize it. Your thinking will shift, and decide “well, I’ve already gone this far, I might as well get as much as I can. I’ll start fresh next week.” Only it doesn’t usually work.
You can see this in your daily life. The public servant who starts with the best of intentions, and winds up a corrupt politician. The intense dieter who decides to cheat ‘just this once,’ and finishes a pizza by themselves four days later. Beware the slippery slope.
The Vicious Circle
Unfortunately, this causes a vicious circle of distrust. Landlords raise rents and security deposits to make up for increased maintenance costs. Tenants get upset, and break their lease without paying what they owe. Then, rents go up more, but landlords don’t see any extra cash.
Home buyers don’t trust that sellers are honest, so they insist on several inspections and a home warranty. This delays the process, puts more ‘hands in the pot,’ and drives up the purchase price, so the buyers pay more and the sellers get less.
Mortgage companies raise their fees to make up for borrowers that defaulted on previous loans. Borrowers then have to spend more money upfront to buy their houses, which leaves less cash on hand to deal with emergencies. If a crisis hits, and they have less of a financial safety net, they are more likely to default on their mortgage.
The list goes on and on.
Stopping the Cycle
Every person involved in real estate, in any way, can be part of the solution. This is true if you’re an mortgage broker, a renter in their first apartment, or a landlord with 300 units.
Integrity is crucial in real estate. By acting with integrity, you help others have faith in the system. You help reduce costs all around, and increase benefits for everyone involved. You sleep better at night, and treat others the way they should be treated. You gain a reputation for being an upstanding person, and through your example, help others act with integrity.
You can make a positive difference in many small ways. Hang a little sign in your office to remind you to do the right thing, every time. If a co-worker is doing something in the moral ‘grey area,’ encourage them to reconsider. Take a moment to put yourself in the other person’s shoes, and think about how your choices affect others. Remember that small, short term gains are temporary, while your integrity stays with you forever.
Stay strong, stay true, and encourage others to do the same. Real estate will be much better for it!