What is Your Code of Ethics?

Not too long ago “business ethics” was an expression that many considered an oxymoron. Then, in the 1990’s corporations made a remarkable turnabout by addressing codes of ethics, conduct issues in policy manuals, etc. The main reason was because businesses became increasingly concerned about ethics after realizing that ethical practices actually made business sense.

The rules of ethical behavior that govern businesses and our personal lives are essentially the same no matter which way you look at it.

Although it is in our human nature to seek rewards for solving problems, people and businesses choose to solve those same problems based on their own standards and code of ethics.

Ethically conscious people and businesses always try to solve problems thinking about the best interest of the individuals involved, all while seeking a reward.

In our personal lives, a reward we may expect for solving someone’s problem may be from a simple “thank you” to a “thank you gift.” The business world is no different. The reward a company expects may be as simple as gaining a loyal customer or as involved as having a customer become the source for business referrals.

Notice I did not mentioned the payment for a service as a reward? That is because receiving payment for services rendered is not a reward; it is simply the ending result of a business transaction. After all, this is how every business works. There is no such thing as a free lunch.

However, unethical people and businesses don’t look at it that way. They will first weigh-in the various self-profitable ways to solve a problem. If an easy solution with a very profitable reward is readily available, most likely that will be their only preferred choice. Even if it means putting the best interest of the individuals involved in jeopardy.

The reward they expect in their personal lives may be as simple as taking credit for someone else’s work or as serious as stealing someone else’s identity. In the business world, a reward could be as simple as maintaining an untarnished reputation by covering up an illegal incident or as serious as pocketing millions of dollars from stockholders, investors, and consumers.

People who live their personal lives with a loose code of ethics or no ethics at all become very dangerous people in the world of business.

Perhaps an example of this could be seen, according to the accusation, in the alleged mortgage and real estate fraud cases against the former Century 21 Su Casa agents, against Norma Valdovinos and the other entities involved, and the cases against Maria Avila from the Rancho Grande power couple of “Maria y Rafael.”

According to author Mary Ellen Guffey, people and businesses commonly face five common ethical traps when making a decision.

1. The False Necessity Trap

People act from the belief that they’re doing what they must do in order to close a deal. They convince themselves that they have no other choice, when in fact it’s generally a matter of convenience and comfort.

During the housing boom, it became very convenient for agents, brokers and lenders to qualify people that couldn’t afford to buy a home in the first place by giving them a subprime loan. Of course not all the blame falls on the industry’s lap, consumers also saw the convenience of buying a home with the hopes of selling for a profit in a short period of time.

2. The Doctrine-of-Relative-Filth Trap

Unethical actions sometimes look good when compared with the worse behavior of others. I think the Century 21 Su Casa fiasco is a perfect example of this ethical trap. “Birds of a feather flock together.”

3. The Rationalization Trap

People try to explain away unethical actions by justifying them with excuses.

Some agents/brokers have justified their unethical actions by “helping” families buy a home when in fact these families could not afford one to begin with. The excuse commonly used by many of the agents accused of fraud is “I did what I had to do in order to get those families into a home.” As the proverb says “He who is good at excuses is seldom good at anything else.”

4. The Self-Deception Trap

People are too willing to inflate or exaggerate their past accomplishments and even make up false statements about themselves or their business.

When the housing market was booming everyone was quick to claim expertise in any one area of the real estate industry. Professional marketers also profited from the housing boom by claiming to be real estate gurus and offering wealth to the people who attended their seminars. Now that the housing boom has cooled down there are as many so called loan modification experts, foreclosure prevention experts, short sale experts, and foreclosure investing experts as there are fast food restaurants in any one city.

But many of these so called experts are no strangers to the law. Here in California I have noticed that some have their real estate license restricted or revoked due to serious past convictions that range from grand theft and petty theft to conspiracy to defraud the United States and more.

5. The Ends-Justify-The-Means Trap

Many took unethical actions to accomplish a desirable goal.

At one point or another, many of the agents accused of fraud were listed as the number one sales agent for their company. Becoming the number one agent was their primary goal; the well being of their client’s financial future was not. Consider the cases of Felipe Neri and the other agents who are possibly now ranked number one on the DRE’s list for investigations.

So in conclusion, if you are willing to let someone work closely with your personal information and have some type of control over an asset as big as your house, do your homework. Check their license records. Call the Department of Real Estate if they have any type of action noted on their license (CA DRE: 916-227-0906). If you find a serious conviction for their restricted, suspended or revoked license, all I can tell you is “Old habits die hard.”

There are many of us that follow a good code of ethics in our personal lives and apply them when we do business with others, but just like in any other industry, there are always bad apples that spoil it for the bunch. These “bad apples” (or “bad actors” as the DRE calls them) don’t follow a good code of ethics in their personal lives and they are the most dangerous people in the business world.