The Ethical Standard Of Suitability In Real Estate

[Bryan Hancock]

Several threads recently have discussed the ethical standard of suitability in real estate. In other words, are the buyers or sellers sophisticated enough to understand the risks of a financial arrangement if it is disclosed or should something be disclosed in the first place.

This topic generally comes up when lease/options and setting unrealistic terms for the tenant/buyer to perform. However, it has also come up with seller financing scenarios where the seller is unaware of how a loan they have personally guaranteed is being used to indemnify sizable deflation risk.

John Reed has some thoughts on this here:

The ethical standard of suitability in real estate

What are your thoughts about how much information needs to be disclosed to buyers or sellers and how much they need to be compensated for assuming non-disclosed risk to keep things ethical? How do you gauge how suitable buyers or sellers are in your business dealings?