Selling for Profit

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johnrogers85

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We have several investment properties that were sold to us at below market value - we got a very “good deal”. We sold these recently and made a profit.

From a Catholic perspective, was taking this profit sinful? Since the sellers at the time likely didn’t realize the “true market value” of the properties before selling?
 
Didnt we run a very similar thread a few months back?

In any case, I personally dont see the sin. The sellers were participating in the same game that you were.

Recognizing value is a skill set that I have little doubt you spent time, energy, and resources to acquire. Furthermore, as obvious as the value may have appeared at the time, it was still speculation that you had to take a risk on. Profit is never guaranteed.

The only thing that could make me question the morality of the situation is if you hustled the owner by lying or something. Or if the owner was obviously incompetent, slow, or vulnerable in some way.
 
By definition, market value is the price at which a buyer is willing to buy and a seller is willing to sell.
Sometimes a seller is willing to take a lower price in order to obtain a quick sale. But it is his decision.
 
ThomasMT said:
Didnt we run a very similar thread a few months back?

In any case, I personally dont see the sin. The sellers were participating in the same game that you were.

Recognizing value is a skill set that I have little doubt you spent time, energy, and resources to acquire. Furthermore, as obvious as the value may have appeared at the time, it was still speculation that you had to take a risk on. Profit is never guaranteed.

The only thing that could make me question the morality of the situation is if you hustled the owner by lying or something. Or if the owner was obviously incompetent, slow, or vulnerable in some way.
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Exactly. We did indeed have a similar thread some time back.

It could have been that the seller was eager to sell, and actually preferred to get less money quickly, money that was a sure thing (because you were standing there with money in hand), rather than waiting around to see if they could raise the price and still sell it. I sell things on eBay below market value (used things of mine) and I deliberately cut prices below what anyone else is charging, to attract the customer for whom price is everything.

As long as the business is being conducted fairly and honestly, profit is not immoral.
 
An object’s value is worth whatever someone else is willing to pay for it. That’s really it.

The fact that I have a 1906 Honus Wagner baseball card valued at $3 million dollars really means nothing. If the only person interested in buying it from me is willing to pay $10000, then that is effectively what it is worth. Likewise, if someone decides they’d be willing to go as high as $4 million, than there’s your true value.

This is not an excuse to price gouge or take advantage of desperate people at all, but a simple rule of valuation.
 
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Thanks all. We have made a hobby of buying undervalued real estate and try to get a good deal where we can - admittedly I don’t give sellers a rundown of what I think the true value is, but essentially say, here’s what we could offer for it, let me know either way. And then we stick to terms once agreed upon.

Sometimes I feel an obligation to let sellers know what I really think of the market price, but from the above responses, maybe this is undue guilt?
 
johnrogers85 said:
Thanks all. We have made a hobby of buying undervalued real estate and try to get a good deal where we can - admittedly I don’t give sellers a rundown of what I think the true value is, but essentially say, here’s what we could offer for it, let me know either way. And then we stick to terms once agreed upon.

Sometimes I feel an obligation to let sellers know what I really think of the market price, but from the above responses, maybe this is undue guilt?
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They’re in just as much of a position to know the market price as you are. If they fail to get their property appraised, or choose not to go with the appraised value, that is on them.

There is no moral question here.
 
johnrogers85 said:
From a Catholic perspective, was taking this profit sinful?
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Whatever would possess you to ask that question? Of course not.
johnrogers85 said:
Since the sellers at the time likely didn’t realize the “true market value” of the properties before selling?
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I spent 7 years as a Realtor. People have all sorts of reasons for selling property, and all sorts of reasons for not selling it at what true market value is.

True market value is a price at which a reasonable seller would sell, and a reasonable buyer would buy.

The fact that you felt the property was a good buy does not indicate that they were “cheated”.

I once represented a friend of a friend who had a modest house built in the 1930-1940 era in a very desirable neighborhood. I did a market analysis and came up with a price, and he balked. And when I mean he balked, we are talking tens of thousands of dollars - and he had a degree in accounting. I never did discover where he got such a wild hair, but he was adamant he would not list for what it should have sold for. To make it clear, I was asked by several Realtors why it was listed so low - the assumption being something was wrong with the property and we were not telling the whole story.

If the owners were selling For Sale By Owner, then they decided they would “save some money” by selling it themselves, and they decided what a fair price it was. And I use the same comment about people with out a Realtor or without an attorney: "He who represents himself has a fool for a(n) (attorney) (Realtor).

Some people are of the opinion that is someone else sells below presumed market, that we - you or I - have a duty to tell them that. As a Realtor, I had a duty; but he sold it below market for personal reasons. That was his business.

The people who put their properties in the market below what you may have though was fair market value and their reasons for doing so. Buying it for what the offer it for is not sinful.

It is entirely a different matter to try to convince someone to sell below market; but that is not what you say happened.
 
Yes to your point, I never try to distort or misrepresent market value to sellers. I just say, here’s the amount we have available, let me know what you’d like to do.
 
If you are initiating the conversation, it sounds as if you are spinning properties. And most properties which are spun are sold initially in “as is, where is” condition, meaning they need upgrading.

I have worked with people who buy properties, renovate, and sell at a profit. And every single one of them has one or more horror stories of getting in and finding they did not recognize how serious the problems were, or found hidden problems not seen on the inspections.

If that is what you are doing (spinning), you still have a right to a profit from what yo do. In most of the cases, the original owner does not have the skill, or the money, or the interest in cleaning things up, or one of several other issues which leave them unable to improve the property. and “as is where is” properties are generally in a price range where the buyers (as opposed to those who spin it) don’t have the capital, etc. to do much to improve it either.

If those you buy from are getting an adequate price for “where is as is”, then you are not cheating them. You have to bring capital and labor to improve it, often sizable capital and/or labor, and you make a profit from, that.

Nothing wrong in that. You are taking the risk on your capital investment for the property as is, the risk of any capital improvements, and the market.
 
I resell for profit but admittedly don’t put a lot of improvement work in - we just try to remarket and find retail buyers. Does that make a difference?
 
You want to know if selling property and making profit is sinful? Can you logically explain what the sin would be?
If you think that is sinful then you shouldn’t judge others in that way. Why would you judge your fellow Catholics like that? Millions of Catholics have sold for a profit? You would condemn that?
 
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You’ve already gotten a lot of answers here basically saying that making a profit isn’t sinful and that if you’re not lying to the seller or trying to pressure them into selling, then you’re not committing a sin here.

Not sure what more you’re looking for.

If your line of work is bothering you for some reason to the point where you worry this much about making a profit doing it, then maybe you should consider doing something else, just for your own peace of mind. As someone said, sellers have a lot of reasons why they might sell and why they might take a lower price rather than a higher one. It’s not your job to probe their whole psychology and frankly they probably don’t want to tell all that to you anyway.
 
Tis_Bearself said:
It’s not your job to probe their whole psychology and frankly they probably don’t want to tell all that to you anyway.
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Exactly! And this doesn’t apply solely to real estate. It can apply to anything being offered for sale by anyone. It’s really nobody’s business why the seller is selling an item, or why they’re asking the price they’re asking.

One of my pet peeves is when I advertise something for sale in the classifieds for what I consider a reasonable price, and the first question out of a responder’s mouth is, “Why are you selling it?” It’s none of their business why I’m selling it, and that question raises a red flag warning that they’re fishing for a reason to try to chisel me down as far as they possibly can.

Those who are interested in honest and fair negotiations don’t ask why a seller is selling something. They take a look at it, inspect it, ask legitimate questions, and then buyer and seller reach a reasonable deal that benefits both – WITHOUT being intrusive. If there’s some question about whether or not the seller is the legal owner, there’s always paperwork or other ways to irrefutably prove that.
 
I was the one who started the last thread on this topic. I just want to say that whenever I correct sellers and tell them the correct value of the item, they never thank me or even respond to me. So, I have decided when a good deal comes along to snap it up and profit from it. The Lord may want me to get that money; it could be heaven sent. It sure feels like it!😉
 
otjm said:
Whatever would possess you to ask that question? Of course not.
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I don’t understand why people respond to any post with this dismissive, ‘you’re-such-an-idiot-for-even-asking’ attitude. Every one of us has a different skill set and body of knowledge and no one should be shamed because they ask a question…seeking an answer…on Catholic answers…
 
NevermoreLenore said:
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otjm:
Whatever would possess you to ask that question? Of course not.
Click to expand...
I don’t understand why people respond to any post with this dismissive, ‘you’re-such-an-idiot-for-even-asking’ attitude. Every one of us has a different skill set and body of knowledge and no one should be shamed because they ask a question…seeking an answer…on Catholic answers…
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A very wise teacher who loved his job once told a class I was in that there’s no such thing as a stupid question. And he told us that even if we think our questions are stupid, to ask them anyway and don’t let fear keep us from it. Good man.
 
NevermoreLenore said:
I don’t understand why people respond to any post with this dismissive, ‘you’re-such-an-idiot-for-even-asking’ attitude.
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Point taken, I was raised on the “memorize it” approach of the Baltimore Catechism, and I am occasionally astounded by some of the questions which come up. I could have been a little bit more tactful - at least a teensy bit… 😳
 
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