Negotiating Real Estate with Ethics

On a daily basis we negotiate for daily resources; like choosing a gas station with the right price, what to spend on dinner, who has the better happy hour? Yet there are certain fields in which negotiating may have more impact on you and your cost of living, like real estate. In real estate every party involved wants to get the best price. With several parties wanting more and not going by the rules, it gets harder and harder to get a fair deal. When making a purchase the buyer and seller enter into something that is called a negotiating process. Both parties want the best out of the deal, the seller wants the highest price and the buyer wants the lowest price. In order to find a common ground, ethics and merit in real estate must be considered to be the primary source to negotiating. Although when dealing with real estate, several parties might argue that there price is right, if you don’t argue using merit and good ethics you may not be successful in reaching an agreement.

CAN ETHICS BE TAUGHT?
When making a real estate purchase the buyer and seller enter into something that is called a negotiating process. On a daily basis we negotiate everyday but theirs certain fields in where negotiating goes deeper. In real estate every party wants to get a fair deal with several parties wanting more and not going by the rules. Ethics and merit in real estate can be consider to be the primary source to negotiating while dealing with real estate and several parties might argue that if you don’t have good ethics you may not be successful.
Negotiating is the key to a successful deal and many parties may want to negotiate and others may just look around it and avoid it in the best way that they can. If a seller wants to sell a property and not include merit while negotiating the buyer might see that he is not being fair with him and might not want to come back to make deals with him again. “Ethical considerations of real estate investing do not get much airtime, but they're hugely important on many levels, both altruistic and pragmatic” (Smith). This is very important when dealing with real estate because it’s important to have great ethical behavior when negotiating merit decisions. For example many can argue that ethics can’t or can be taught but can they for those that argue that it can be. “You’re either born with ethics or you just don’t have them” is what many individuals might argue but believe it or not several professionals say that ethics can be taught. There have been several organizations that teach ethics in their facilities because they want the best out of their workers so that they can be more productive. Ethics consist of what we ought to do in order to be successful. There was a recent article in a famous editorial, the Wall Street Journal where there it stated that ethics courses are useless because ethics can't be taught. For an article to state this, this can be very important in many ways because with this publish many would say that only proof would solve this conflict. In an article by the Santa Clara University it states that, “Almost 2500 years ago, the philosopher Socrates debated the question with his fellow Athenians. Socrates' position was clear: Ethics consists of knowing what we ought to do, and such knowledge can be taught” (Velasquez).
Ethics is important in every professional field but when dealing with real estate we can say that it is a must in order to have the best decision for all participating parties. Some even say that in the real estate industry theirs a lack of ethics and that it is one of our greatest national scandals. Also, that it is a hidden scandal because thousands of consumers don’t realize how they are being hurt. Many consumers are purchasing a property with little references to that property. Several individuals don’t take the time to do research in the real estate market and compare properties before purchasing and because of that a seller might be so good at selling that when he realizes that he’s selling a house to someone who is not that very good, the seller tends to take advantage. When this happens the seller happens to not use his ethics skills and tries to focus more on getting a better deal for himself. In having ethics in real estate this will help all to become winners in real estate. It will make the business of buying or selling a home the wonderful experience it’s meant to be and both the seller and the buyer would end the deal with a great feeling knowing that both were successful, one in selling a property and one in buying that dream home.

STEP BY STEP OF NEGOTIATING WITH ETHICS:
In negotiating with ethics there are a few steps you want to take into account. The first is to separate the people from the problem by focusing on what’s fair for both parties as opposed to one side. One might say, “To walk a mile in someone else’s shoes would give you better perspective on why they see things the way they do.” This requires taking a neutral position on negotiations by promoting a position that is better for both parties as opposed to one. Looking for the maximum outcome for each party using compromise presents a win/win. Selecting a neutral position requires developing objective criteria.
Objective criteria can be market value, precedent, scientific judgment, what a court would decide, moral standards, equal treatment, cost, etc. Using market value as an objective criterion would be to allow the current market value of a particular real estate property dictate the listing price as well as what consumers will pay. Precedent focuses on recent or past sales in the neighborhood or similar home. What using objective criteria does is allows a negotiation to take other things into account besides what each party thinks. When negotiating a real estate transaction, if you were looking to purchase a property and were told a selling price that was hire than you anticipated, you would ask what is dictating the asking price. If you were told that this is the current market price and precedent also confirms the price, you may consider it. Although if you were told that the property has sentimental value to the seller and there is no other reason why the property is listed as such, you would not be as open to buying that property. When negotiating real estate, using facts that can be proven is your best evidence to why your price on the property is more accurate. Not to mention that disputes regarding real estate usually end up in court so you might as well start building your case from the beginning.
While using objective criteria in negotiations you will begin to invent options that have mutual gain. Using market value can ensure that the buyer is not being over charged and can also provide the seller a quick sale. Inventing options for mutual gain is when you suggest common solutions that can benefit both parties. Using this strategy can not only provide for a smooth and happy negotiation but can also lead to increased and repeat business. Consider the homes that sit on the market for longer than preferred, they typically are either over priced or do not convey a value to the buyer. If the seller consider reducing the price to something the buyer sees more reasonable or even add some features like including furniture, they are more likely to sell the home. Otherwise they may not sell the home if they are insistent on not reducing the price of the home.

NEGOTIATING WITH ETHICS PROS AND CONS:
There are numerous advantages or pros that could be derived from negotiating with ethics or, also called, principle negotiation. For starters, separating the people from the problem allows more energy to focus on actual problem rather than the people involved. It also keeps the parties involved from mixing in the relationship. Principle negotiations focus on the interests of the parties and therefore provide a path for mutual adherence along with creating more results for these interests. It challenges each party to look for more options to solve the root cause of their problems (Funken 3). In addition, it builds a foundation to enhance the party’s relationship, getting each party to take into account emotions and future involvements amongst the parties. Last but not least, it takes into account legitimate standards. By providing authoritative standards the parties do not have to compromise but rather conform to the bylaws and distinguishing or meeting their interest. However, principle negotiation does have some disadvantages also.
Cons or arguments of principle negotiations include being to generalization, interest focused and hard bargainer. Generalization is having a general idea with a general application. The parties are being constricted to the four principles outlined in principle negotiation process and not allowed to venture in other possible negotiating steps. There may be times when negotiations could be concluded in more efficient ways than those listed in principle negotiating for instance, letting the parties think outside the box or by incorporate other negotiating styles. “Moreover, Provis warns that the focus on the concept of ‘interests’ flattens out the complexity of human interests, values and beliefs. He points out that often negotiations hinge on people's values and perceptions, rather than on their interests” (Funken 6). If the parties tend to focus on the interest alone and not perceptions and values of the people then there may be possible barriers that may arise. Principle negotiations states to use negotiation jujitsu when dealing with a hard bargainer but what if the other party has other motives. Some possible motives can be revenge, an intelligence advantage, or the thrill of negotiating (Funken 11). I understand these may be a tad extreme but they do exist in some cases and should not be completely omitted going into a negotiation.

Funken, Katja. “The Pros and Cons of Getting to Yes.” n.d. Web. http://200.14.84.223/apuntesudp/docs/cfi/(CFI8225)Negociacion_Crisis_y_Conflicto/(2003-03-25)_378_the_pros_and_cons_of_getting_to_yes.pdf 30 Oct 2009.


Team members: Jose Alvares, Jose Villarreal and Luis Ramirez.