Author Craig D. Lounsbrough once said, “A compass calibrated by my greed is a pretty nifty way to legitimize my agenda. However, true north on a compass like this is a straight line to the edge of a very large cliff.
Aligning your business with anything other than virtue can lead to disaster. Finding virtue, however, can be an elusive task.
We live in a world which, over the past 100 years, has moved away from a bedrock of absolute values and common morals and replaced them with relativism.
Therefore, we have avoided words such as “virtue”. Historically, the word virtue has had theological connotations related to moral standards, and if you live in a relativistic society that has no common agreement on the definition of morality, it becomes even more difficult to pin down the concept of virtue. .
I believe that an inability to understand virtue can lead to an inability to build a successful real estate business.
The virtue and the code of ethics of the real estate agent
Virtue can be defined as moral excellence. Wikipedia defines virtue as “a trait or quality that is considered morally good and is therefore valued as the foundation of principle and good morality. In other words, it is behavior that exhibits high moral standards: do what is right and avoid what is wrong.
We can all agree that “doing what is right and avoiding what is wrong” is a good thing, but thanks to relativism, we have a hard time defining the words “right” and “wrong”. This minor detail allows armies of lawyers to have paid employment. Since this concept is directly linked to the definition of ethics and the importance of ethics led to the creation of the Realtor’s Code of Ethics, it is worth discussing.
Philosophical foundations of virtue
We have struggled through the ages (going all the way back to Aristotle and Plato) to define virtue. I would suggest we go back and look at the seven virtues that helped frame a fundamental understanding of the concept.
Although there are a few different lists of “virtues”, the common list includes prudence, courage, faith, hope, charity, temperance, and justice. This article will focus on the first virtue – caution.
Caution is one of the most misunderstood words in the English language. Most of us immediately associate the word with “prude,” which conjures up all sorts of negative images.
Although at its most basic, prudence means “good, prudent judgment that enables one to avoid danger or risk”, Merriam-Webster’s full definition states:
- The ability to govern and discipline oneself through the use of reason
- Sagacity or insight in business management
- Competence and good judgment in the use of resources
- Prudence or circumspection as to danger or risk
At its core, prudence includes discipline, the ability to manage effectively, good business sense, and the ability to understand and manage risk. There’s a lot to unpack here: the definition of discipline alone has spawned countless books.
The best discipline is self-discipline
Discipline conjures up images of an external force coming to bear on someone to keep them in line with a specific set of behaviors. The corresponding negative connotation is punishment for behavior that deviates from acceptable norms.
The best discipline is actually “self-discipline” – instead of relying on external force to keep things in order, self-discipline is the process of pushing yourself forward, developing internal motivation and choose to act positively without caring about how you might be feeling.
Heed the word “reason,” and it becomes the ability to set reasonable goals and then intentionally engage in the behaviors necessary to achieve them, while avoiding distractions, obstacles, and negative or unethical behaviors that could potentially derail your stated goals.
The Critical Role of Insight in Business
Insight is also essential in business. Merriam-Webster defines shrewd as “marked by an intelligent perceptive conscience and a keen sense of hard-headedness”. Basically, it’s common sense. Antonyms would include stupid, naive, and even stupid. I have personally found that decisions I made in haste without taking the time to fully analyze the implications – quick judgments – often resulted in stupid mistakes.
Applying common sense self-discipline, every decision you make, using self-discipline or self-control, must be carefully reasoned with your stated goals in mind. If a seemingly good idea doesn’t align with a person’s overall goals, a savvy trader will move on to other opportunities that are more aligned with their business goals.
Good judgment in the use of resources
Good judgment in the use of resources comes next. It starts with an achievable and realistic budget that is consistently adhered to. When I first tried to budget for our business, I set lofty goals and then formed my budget around those unrealistic goals. The consequence was a totally useless budget that was thrown away after the first month.
Models are essential for resource management. An excellent source of effective business models in real estate can be found in the book The Millionaire Realtor (It’s Not About The Money, It’s About Being The Best You Can Be).
Ironically, because I’m personally opposed to the use of the word “millionaire” in advertising, I had a copy of the book gathering dust on my shelves as I was busy trying to find effective role models on which to manage my business while developing practical budgets. Once I opened the cover and started reading, I found that I no longer had to try to come up with patterns on my own – they were already in the book.
Caution in the face of risk
Finally, prudence or circumspection as to danger or risk. Risk management is essential in every industry. In the construction industry, you see guardrails on scaffolding, orange protective caps on protruding rebar, and detailed rules and procedures regarding safe construction practices. As a former unionized carpenter and later a licensed general contractor, I have witnessed many accidents over the years that could have been avoided if risk management procedures and safety rules had been followed.
It’s no different in real estate. At the heart of risk management is our Code of Ethics, which provides our industry’s safeguards. Inherent in the idea of morality are defined rights and wrongs as prescribed by the code. I recently heard a savvy agent say, “No transaction is worth an ethics violation and potential loss of your license.”
Although we cannot rule out the possibility of honest mistakes, there is a clear difference between a single mistake and the habit of circumventing the law for personal gain. Caution dictates that we live our lives in the real estate business without even the appearance of wrongdoing in any way.
There is a fundamental difference between living life trying to uphold the law and acting with integrity and acting in a way that technically “not breaks” the law or acting with impunity. These two lifestyles are polar extremes.
From a real estate perspective, prudence is the ability to set realistic goals, provide the self-discipline necessary to achieve those goals, and manage business affairs effectively, while exercising prudence to effectively manage potential risks and , in the midst of it all, build a business on a foundation of integrity.
It seems to me that this is something worth pursuing.