It really is a matter of ethics. Do the lines of ethics and investment really cross and fade so easily into each others' imaginary boundaries? This seems to be the case in more than just the world of investment. (I'm thinking of Martha Stewart and Bernie Ebbers as just two high profile examples from our near past.)

This is the essence of ethics. Its boundaries curve and meander, tickling pocket books and padding bank accounts. Or do they? At what point do we turn down a profitable investment in order to support more altruistic endeavors? At what point do generic "code of standards" stand as no real code at all?

The case of confessed serial killer Dennis Rader has attracted recent infamy, leading to the auction last week of his Wichita, Kansas, home.

It could boil down to morbid fascination. It could also be an indication of fading ethics in real estate.

In this particular case there are two separate issues. The recipient of the profits and the intent of the investor.

1. The profits of the sale supposedly go to Rader's family (wife and daughter), who were completely innocent to the crimes. In this frame, you cannot push blame onto them for wishing to move out and on.

2. The selling price of $90,000, was well over the appraised value of the house ($57,000), which could indicate that this purchase was one that capitalized on the misfortune of others. The simple question is this: Had Dennis Rader lived his life spot free, would his house have sold for so much money? What are we rewarding in our society?

Would the house of Mark Hahn sell for this much above appraisal? Mark is also a resident of Wichita, Kansas. What did Mark do? Nothing as "newsworthy" as stalking a city for a decade. He "merely" saved a boy's life, rescuing him from a near-drowning in the family pool. Really now, what are we rewarding?

The investor in the Rader property? Michelle Borin, owner of a local, exotic dance club in Wichita. Commented Ms. Borin after the auction, "I'm a real estate investor. I'd like to see all the proceeds go to Mrs. Rader and help her family out ... .This is the least I can do."

Hmmmm. I suppose then of course this purchase must fall in the altruistic side of investment, steering clear of any ethical boundaries? She intends to make no profit and any profit she makes she will send in a personal check to the Rader family? I can see it now in the memo: "the least I can do."

Defenders of ethics should be relieved then that Byron Jones, of Andover, Kansas, didn't make the highest bid. (His maximum was $60,000) He had less "charitable" intent, "This house is going to sell inch-by-inch on the Internet."

Jones knew why this house was a possible "investment" goldmine. When asked why the home would sell for $90,000? he answered, "The difference is who he is."

This is exactly the catch with ethics. Sometimes taking the ethical action is not the profitable action. Borin or Jones could easily in our society turn the purchase of the home around for quick profit, selling bits of it here and there, but maybe deciding to turn down those profits.

There are no iron clad codes of standards for investing in real estate, merely generic guidelines for staying on the right side of the law. Very simply, there is no clause that dictates what sort of homes you can and cannot buy, or what for purpose you may use those investments. And rightly so. But do we need an iron clad code to tell us that sometimes we must make a stand for the greater good?

So Ms. Borin, if your intentions were as pure as you attest, then perhaps the ethics fairy whispered in your ear, "buy me for the greater good" just out of our earshot. Time will tell and perhaps exonerate you.

There is no guide for every ethical decision or investment that many come your way. Remember simply that every investment has some societal implication, sends some message to the greater public. What message has the real estate investment world sent this week?

Published: July 18, 2005

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