One regional reader sent me a message with this scenario:
“Dear Nicole, I recently had a business interaction that left me with a rather bitter taste in my mouth, and I wondered if perhaps I was over complicating the issue. I was on the market to purchase a luxury yacht for leisure use, and was in heavy negotiation with a potential seller. After a number of meetings, viewings and negotiation, I finally agreed upon a figure and set a date to undertake an engine and run test, and to complete the transaction. To my utter surprise, as I arrived at the marina, I saw the owner of the said vessel, undergoing a site visit with another buyer. The owner also had the audacity to invite me to sit and wait whilst he was finishing up this process. Now, I understand this may be trivial to some; however this was a very heavy weighted decision for my retirement which my wife and I did not take lightly. Am I overreacting? Or was this seller’s behaviour completely unethical?”
My response to the writer began with an overview of business ethics, which according to investopedia.com, means the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Law often guides business ethics, while other times business ethics provide a basic framework that businesses may choose to follow to gain public acceptance. Even though this can be considered the academic overview of what is accepted behaviour in business operations, the underlying matter that binds all transactions in a business context is trust. In any culture, country, organisation or corporation, if trust is not developed and maintained throughout the business interaction, then more than likely the transaction will be shaky at most.
Based on the scenario above, there are a number of red flags that provide a good benchmark for the transaction to be seriously reconsidered. The first being the breach of trust, the second being the lack of respect demonstrated by the seller. Based on the information provided, the seller clearly would have been afforded the same insight you have provided to me, including the fact that this is your retirement investment plan, which means, you would also have an emotional investment into the purchase. It stands to reason, the seller sought to utilise this intelligence to his advantage, thinking that perhaps your emotional connection to advancing your retirement plan could be manipulated thereby encouraging a faster, and perhaps higher sale price. Further, the complete lack of respect demonstrated by inviting another buyer to view at the cusp of your closing the sale demonstrates a lack of transactional intelligence by the seller. This can also be construed as another means of pressuring you into purchase at a higher bid price, but the demonstration of high interest by others. This seller has broken two fundamentals in terms of reputable transaction management, trust and respect. Think carefully before you proceed.
I submitted this feedback privately to the reader, and was provided an update, which stated:
“Dear Nicole, thank you for your feedback. After a few checks on the background of the seller, we realised this was indeed his modus operandi [attempting to manipulate a price hike], and declined to proceed with the sale. He still has the vessel in his hands, and has reduced his asking price.”