The term ethics can be considered as a significant factor in the decision making within many different businesses and industries. Ethics can be generally defined as “the discipline of dealing with what is good and bad” or “a set of moral principles and values” (Duska, 2007:3). Ferrell et al. (2011: 7) refer to ethics in a business sense as a study or philosophy of the way in which people conduct themselves. This applies strongly in particular to the real estate industry and its many professionals. Because of the very close contact and relationships which are built between real estate professionals such as estate agents and their clients, ethical considerations take on a yet more important role, however the ethical standards that such professionals exhibit may often vary (Plimmer et al, 2009: 20). In particular, there exists a commonplace perception that real estate professionals are often unethical in their practices, much a result of media exaggeration (Plimmer et al, 2009). It is true however that such professionals face challenging ethical dilemmas, unique to their profession (Long, 2008).
The most important ethical issue facing a real estate professional, as indicated by research carried out by the RICS (Poon, 2004) relates to providing a fair service to the clients which he/she is dealing with. This means being able to provide a balance that considers the interests of the company the professional is working for, the client’s interests and indeed the professional’s own interests (Plimmer et al, 2009). There are many situations where the issue of fairness is applicable within this profession. An example of this is through the unfair advantage that can be given to potential buyers and tenants over vendors of property being advertised by the estate agent. In this case, the estate agent may be persuaded by the buyer to hold all other offers on the property in order that they can prevent escalation of price from other interested parties, as well as guaranteeing the agent a sale (OAPA, 2010). This can be referred to as cliental influence which poses a difficult pressure that a real estate professional needs to be able to deal with ethically through providing fair information and considering the impact which that information may have on each of the parties involved in a transaction (Plimmer et al 2009: 45).The OAPA Code of Ethics (2010) points out how an agent should refrain from being influenced into giving potentially unfair information or biased opinions, and that they should if necessary comment objectively to ensure a ‘level playing field’ for all parties involved. Being drawn into acting for one party over another, especially if contact and decision making is slow for instance, may place pressure on an agent to given hints or unfair advice to one party, for instance through the encouragement to ‘gazump’ or outbid another buyer by indicating the range of an offer (Coulthard, 2009).
Another ethical issue may relate the influence of a client’s preferences, particularly when it comes to submitting a property for sale or rent at a price that the client is comfortable with (Rasheed and Tajudeen, 2007). This can often provide a dilemma for the real estate professional whereby a balance must be found between both the true market value of a property weighed up against the client’s desired pricing of their property for instance. What must be considered is whether it would be ethical to place a property on the market set to the client’s desired reserve price even with the knowledge that the property may not feasibly achieve that price (BBC Website, 2004). There may also be a pressure to go by the client’s preferences in order to gain or retain them as clients The Property Ombudsman, 2006). Waller et al (n.d.) note that going along with an overpriced listing may lead to false hope for the client and may return negative criticism if the property remains unsold. This suggests that above anything, professionals should be as open and honest as possible when valuing a property whilst making sure to support their reasoning if a client disagrees, in order to avoid disappointment.
Like valuation, honesty and good judgement is necessary when an agent advertises a property. It would be an unethical practice to entice buyers into viewing and possibly purchasing a property which does not live up to its description. The law with respect to this is essentially covered by the Property Misdescriptions Act 1991 which makes it illegal to make false or misleading statements about a property offered for sale. The issue is however that there is no requirement through this legislation that insists on the disclosure of all information (Department for Business Innovation and Skills). This leaves another ethical dilemma in the hands of a real estate professional who is likely to have the vendor’s best interests at heart in aiming to market the property in the most attractive manner he/she can. However ignoring unavoidable aspects of a property may prove to be timewasting and misleading, especially to potential buyers who raise expectations such as in the case of a Kent based estate agent that pleasantly advertised a Fisherman’s cottage, but failed to mention that it was in close proximity to two power stations (Rowley, 2011). Had a potential buyer wished to purchase the property without viewing it (possibly through an auction), it would be ethically incorrect for the agent to not mention such a fundamental detail which could sway the offer or purchase altogether.
A further ethical issue which has been encountered in the past is the provision of a false image of the agent whereby leaving previously sold properties in the shop window or on a website may mislead clients into thinking the company is consistently successful (Rowley, 2011). A regular review of portfolios should be completed to avoid unethical misrepresentation.
It is clear that there are numerous situations where the ethical integrity of a real estate professional will be tested. The lack of specific set rules laying out ethical obligations means that it is up to the professional to take ethical issues into account which means that there may often be situations where unethical decisions are made. It seems that this is predominantly based on a range of pressures which come from both the company the professional works for to achieve goals or targets, and, the clients that want an efficient and meticulous service that achieves their demands. This adds to the personal goals a professional in the field may have through gaining credit or even commission for selling a property for example. Overall, it would seem that the balancing of all these pressures has the bearing impact on the ethical stance a real estate professional will take.