Reading Instructions: If you are a NAR member, please take your “NAR hat” off and read this post as an individual. This post does not intend to offend anyone. Many of you feel strongly on this subject on either side of the issue and I certainly respect it. I will tell you when it is time to put your NAR hat back.
Recently the he U.S. District Court in Chicago allowed the Department of Justice (DOJ) suit against NAR to proceed. The key point – DOJ alleges that NAR discriminates against brokers using non-traditional business models, “denying them the full benefits of MLS participation”. If you don’t know details click on the link above to read about. I will get back to this suit later on.
There are many good things NAR did and is doing for realtors and clients, such as improving agents training and knowledge, enforcing minimum transaction standards, and the most important from my point of view – the code of ethics. Some of you will say that the most important role of NAR is to protect Realtor needs and that they act as our union. The problem with protecting realtors is that by doing that NAR crossed at certain point a very important line. It did it when it started protecting our own interest more than the interest of customers we are supposed to serve. By doing it, we hurt not only our customers but we hurt ourselves as well. Once you reduce or weaken your competition, you eliminated a key factor of making progress. And this happened to us, realtors.
In my personal opinion, NAR and MLS actions stifled competition and progress and delayed real estate entry to the information age by 10-15 years. We did it not because we are bad people (after all, most of us are NAR members), but we thought that it is a best way to protect our business. Unfortunately, it is the worst way, because if you limit the competition, you shoot yourself in a foot by eliminating key driver of your own progress. Without competition you stagnate. You might full yourself that you do it because you are the expert, so you know the best. One of the symptoms “of loosing objectivity” is believing that you are the best when there are clear signs that this might not be the case any more. Let me give you an example.
Someone recently has mentioned www.realtor.org website as an example of NAR innovation. I would compare this website to a website created by a communist government of Vietnam teaching farmers how to grow rice. If it existed (it might, but I didn’t bother to check) it would closely resemble NAR website. It would have dry, 50 years old, carefully processed by bureaucrats and lawyers content. Sorry for a little bit of exaggeration, but I needed to make a point.
NAR owes us - REALTORS a lot, as it is the key contributor to creation of a growing public perception of us being unsophisticated and greedy bunch. The key question I am raising is: Can NAR be reformed and start representing the best interest of clients and Realtors? A few years ago, I would probably say no as graveyards are full of failed trade associations.
Fortunately for NAR and MLS, the current real estate revolution started a few years ago. You can read about it in “Who started real estate revolution?”
We are lucky that Zillow, Trulia, Red Fin are putting pressure on us. They showed that there are other ways to serve real estate clients. Of course nothing would happen if clients didn’t respond. And clients did respond. They love new services. It is not important at this moment that Zillow estimates are not accurate and the Red Fin agents might not know much about real estate. It is important to see that clients want different services than they were getting from us. It is a message which we need take very seriously to our hearts.
NAR, MLS and a few local associations noticed the competition. For the first time, NAR and MLS realized that someone else is capable of creating alternatives and clients might abandon realtors. After all this years of red tape and stagnation, NAR and MLS started to push for more changes, better technology, integrated MLS (you can find some background information in MLS in Turmoil). Do they have enough time before the history will push them to the abyss of organizations that time has passed?
There are many voices, including in our community calling for a reform of MLS for different reasons. There is one very important feature of MLS that justifies for me the need to protect and consistently refine and improve the MLS concept. MLS is giving an equal playing field. This is why small, independent brokers can compete against large brokers. We should make sure that the equal playing field extends to new brokers and new business models. If we don’t do that, real estate market place will be taken over by a few large players and the end result not only will wipe out thousands of brokers and agents, but it will reduce clients’ choices as well.
Can NAR be reformed? It has to be reformed. It is in our best interest to make sure that NAR embraces change as quickly as possible. So, put your NAR hat back on and tell me what could be done to better embrace change, including competition, and to protect clients and our best interest. We could call, for example, for introduction of NAR constitution which would promote an open discussion among the ranks, promote competition and change, as our nation founding father did over 200 hundred years ago. NAR activities should be more transparent to all of us. We should have right to openly question NAR leaders and challenge them. The fact that you as a NAR activist know what is going on doesn’t change the fact that for the rest of us NAR actions and decisions are often a mystery. Moreover, NAR leaders lost their credibility with me as their actions are hurting both, clients and members.
We can win our market share by being the best and not by creating rules to limit the competition. There is no doubt in my mind that clients, agents and brokers will be better served if we put a pressure on NAR to change.
Will DOJ win the suit against NAR? I don’t think that we should wait to find out. Let’s start cleaning our house now.
Please check also: Can We Fix NAR? Sequel Part 2