An Ethical Dilemma
The other day I got a phone call from one of my coaching clients (we’ll call him John) stuck with a moral dilemma. Though I do not moonlight as a yogi, I was happy to guide him through his conflict. It is common and one I have dealt with many times.
John has a great wholesale deal under contract. The property sits in a neighborhood full of new construction, semi-custom homes. The house is one of only a few remaining buildings that have not been purchased and torn down to make room for larger, nicer homes. These properties are highly sought after and only come around once in a blue moon.
John’s conflict began when he was offered $25,000 more than his contract price for the house. Sounds like a great situation. John thought so, too. He verbally committed to the buyer and sent him an assignment contract with wiring instructions for the deposit. Three hours later the phone rings.
A second buyer saw the property and was sold on the project. He offered John $52,000 more than the original contract price. In addition, he was ready to close in one week. No contingencies. No drama. No games.
At the conclusion of that second call, John scheduled a meeting for later in the day. Then he called me for advice.
There are probably more than a few people reading this right now thinking, “This is a no-brainer. Sell the property to the second buyer.” Emotionally I can understand the argument (here comes the ‘but’).
But, there is still that verbal agreement with the first buyer.
In business and in life there are only a few things that really matter. Love your family. Tell the truth. Protect your name.
This is the advice I gave John:
Do not let a few thousand dollars distract you from the bigger picture. This is not your last transaction. This is not a life-changing amount of money. Your word is worth more than $27,000.
Let both parties know you are a stand-up guy. Call buyer number two and tell him/her that you accepted an offer earlier that morning. You would love to do business with him/her, but you have a verbal agreement with someone else. Let buyer number two know that if you do not receive the contract and deposit by the end of the day, you will accept his/her offer. Then call buyer number one and have a similar conversation.
Give buyer number one an offer that becomes a win-win for everyone. Since John was facing the potential of making an extra $27,000 by accepting the second offer, why not be straight with buyer number one and cut hi in on the deal? I suggested telling buyer number one that if he conceded to letting John sell the property to buyer number two, John should offer him a concession of a few thousand dollars. It gets rid of any potential for bad blood and lets John make more on the deal.
If you wholesale properties long enough, you are likely to find yourself in this type of predicament. Remember not to panic. This is a good problem to have. Even though it may be tempting, do not ever compromise your integrity for a few extra dollars.
A reputation takes a lifetime to build, but only a moment to destroy. Guard your name wisely.