Today, conflicts of interest make top headline news daily and fuel the wrath of the DOJ and FTC. Greed is at the root of carelessly mixing business lines, which is why Brad Inman says separating ownership is often necessary to avoid conflicts.
 

New markets require new approaches and new tactics. Experts and industry leaders will take the stage at Inman Connect New York in January to help you navigate the market shift — and prepare for the next one. Meet the moment, and join usRegister here.

When I was a young newspaper columnist, I was offered $20,000 by a developer to do a story on his development. He proposed disguising the payment as a research project. Though I was scrambling financially at the time, and I admit that I was tempted, I declined.

That’s called a bribe and a blatant conflict of interest.

Sometimes conflicts are more subtle.

Real estate brokers and agents have relationships, even ownership or equity, with title and mortgage companies. They sometimes steer business to those providers without clear disclosures to consumers about the nature of those relationships, even when it could violate RESPA laws.

Today, conflicts of interest are at the top of the news with headlines on the crypto meltdown, where exchanges mixed lending and hedge fund businesses with what we were led to believe were independent crypto marketplaces.

Also in the news are stories about big accounting firms, like E&Y, spinning off its consulting business from its auditing practice. The conflicts got it in a heap of trouble.

Bankers and analysts at the same firm have a similar conflict. An analyst gives a company a good stock rating, and the other side of the shop advises the firm on M&A or fundraising.

Greed is at the root of carelessly mixing business lines. Separating ownership is often necessary to avoid conflicts.

Twenty years ago, I owned an online real estate company, Homegain, at the same time that I owned Inman News. The two companies had separate management teams and constructed a wall between the two enterprises. Inman News also disclosed my ownership in Homegain when it covered the company. 

Nevertheless, the duality could appear conflicted and, at times, was messy. Selling Homegain ended the problem.

I resolved never again. 

To this day, I am accused of owning stock in this real estate company or that one, like Zillow or Compass, which I don’t. 

Vice versa, undisclosed investors in media companies create a similar conflict. For me, it’s not worth the hassle.

Inman readers hate conflicts of interest and understandably are on the lookout.

In the news business, advertisers are known, which helps the reader know what’s up. But it can still cause skepticism.

Transparency about conflicts goes a long way. Being opaque is careless.

So-called “experts” wax about companies on blogs, conference stages or social media. What we often don’t know is that they are promoting paid clients or that they have shares in those businesses. The temptations are understandable but highly suspect if not disclosed.

One such expert once told me he was protecting his client’s confidentiality. Bullshit.

Oversight and regulation are necessary when companies and industries persist in misbehaving.

An example is buyers and sellers being confused about who represents who in a transaction and how everyone is paid. Compensation and agency relationships that are clear to the industry can be muddy for the consumer.

That blur, in part, triggered the recent mega lawsuits and brought on the wrath of the DOJ and the FTC.

Real estate has its share of these fuzzy relationships.

The bottom line: Everyone is better off if the associations are disclosed.

Email editorial

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×