GOOD and BAD about NAR: Can we fix NAR?

By
Real Estate Broker/Owner with Cimpler Real Estate, Inc. CA BRE# 01330941

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 

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Rainer
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Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Caleb, thank you for the comments. You made a number of excellent points. However, I totally missed my main point I totally missed my point. NAR is a typical example of the organization that cannot change on its own. Why? It lost the ability to change and evolve.

Let me explain it how it works. Yes, Realtors are NAR members. One would think that NAR represents the will of an average realtor.  However, it is not how it works in the centrally controlled organization. Using the old communist (yes NAR belong to the same category – it is a centrally run, union or party like organization) party jargon, there is “cadre” or “elite” and there are “masses”, or everyone else. Let me go through an example to illustrate how it works. Let’s assume for the purpose of this example that you are a NAR member. You noticed that your organization needs to change. You might think: “I will work very hard, I become elected to the “NAR central” and I will promote changes”. So you got elected and try to “shake up an organization”.  Before you can finish your first sentence, someone will show you “the book of rules” and tell you: you were elected to defend these rules. If you persist, the central will put a pressure on you and will “chew you up”.  You have to choice, either to leave and to five up. There benefits of “seeing a greater message”. You might become a proud member of the central and you will carry their message forward. It is much easier! Do I exaggerate? Unfortunately, I don’t.

Unless a mechanism is put in place in place (such as an American Constitution) that allows a n organization to change and adapt, nothing sort of a “revolution” can be done to change the organization’ thinking.

My point is that only the competition from an outside can force NAR-like organizations to change. We are lucky as “the revolution” has already started. It is important that the “masses” of agents and broker realize that it is time to put a pressure on the NAR elite to embrace the change. If we don’t, DOJ might do it for us and consequences of this might be disastrous to our industry and clients.

By the way, I was shown today a book of rules of AR (yes, Active Rain).  I was scolded for not understanding how the “feature posts” system works and disturbing an AR member’s hard work to enforce them. My jokes are usually not very good, but I cannot resist trying one.  AR is on the way to becoming a part of NAR.  It misses only N in front!  Yes, I know. It is not funny.  But this is why I am trying to prompt you to publish featured posts guidelines. You created a great system – make sure it does not run away from you and becomes uncontrollable.

Thank you for a link to the today’s bloodhound post and thank you again for taking the time to comment. I really appreciate it.

Jul 18, 2007 03:12 PM #31
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Lane, thank you for your very good comments. From what you are saying it seems to me is that GA system is not much different from what we have in the West. Yes, you can have a license, but you to become Realtor ™, you have to become a part of local association, a member of NAR. NAR and associations are doing a lot of good things. At the same time they are shooting themselves in a foot and try totally unnecessarily prohibit some business models.  You are right - there is a plenty of competition, so don’t try to stop it, because you will hurt yourself and those who supposedly you try to protect – all of us.  So one really have to wonder, what are they smoking?

Jul 18, 2007 03:24 PM #32
Rainer
50,858
Patsy Ittner, Your Premier Broker Selling St. Augustine Real Estate
Little Fox Realty - Saint Augustine, FL
This is why I came to ActiveRain.  Great post. 
Jul 18, 2007 03:34 PM #33
Rainer
155,559
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Artur, I hope that you don't mind me jumping in to address Caleb's comment.  If so, please feel free to delete this comment. 

Caleb:  A few months ago, right after joining AR as a matter of fact, I was working on my web site and from AR had found out that it is important to have bigger web sites linking to your site in terms of SEO.  I decided to make sure that I had a link on my associations official web site, Realtor.com.  Turns out that I didn't and couldn't unless I was willing to pay over $3,000.00. 

I thought that this was wrong, so I contacted NAR through their 800 number and basically ran into a bureaucratic roadblock.  I then emailed the current president of NAR, who never even acknowledged my email.  I didn't even get an automated replay. 

I did however get a reply from the president elect who passed me on to the gentleman who is the liaison between NAR and Move, Inc..  This gentleman  sent me a boiler plate response that was frankly, nothing more than propaganda.  I wrote him back challenging certain points and never heard back from him.  I followed up via email 2 additional times asking what the procedure would be to bring this matter before the board of directors for consideration.  I then called and left him a voice mail, which  was never returned.

Yesterday, I talked with the executive vice president of my local board who is one of over 600 "directors" and asked him what the procedure would be.  He told me that I should run for a local director's position and work my way up through the organization in order to get into a position of being able to change it from within.

I asked him how long it had taken him to become one of these 600+ directors....the answer?  Over 20 years.

Hmmm, I'm 46 now.......see what I mean?  Not that NAR doesn't do some pretty good stuff.  They do, but they definately aren't interested in any kind of input from the masses and in relationship to it's relationship with Move, Inc., I believe that they have strayed for enough from their core mission to be in violation of it.

Just my two cents worth here.

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Jul 18, 2007 03:39 PM #34
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Thank you Patsy!

Bob, wow it is almost scary!  I was just imagining the situation, but of course I am not surprised...  I have to say that I have unfair advantage. I was involved with this type of organizations a few times. Changing NAR is definitely a challenge! Thank you very much for sharing your opinion.

 

Jul 18, 2007 04:20 PM #35
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Bob, can I use your last entry to a sequel on NAR?  Please let me know.  As a matter a lot of my education on NAR comes from a very accomplished local broker.  He was a President of the local association and he was a Director on the State level. He was pushing for changes.  Guess what?  He got burn out. I couldn't believe how this experience was similar to what I went through in my twenties.
Jul 19, 2007 04:58 AM #36
Rainmaker
571,312
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Artur,  Seems that this topic has opened up quite a few other issues.  Much of your initial post is based on sweeping generalizations and cliches.  If you really want to see fundamental change it might be more effective to set out some bullet pointed issues and offer some constructive solutions.  That way we could focus on the basic issues and perhaps see some great input.  Some have made a good case against lowering general standards and the resultant lessening of standards and levels of service to our customers.

 

 

Jul 19, 2007 06:45 AM #37
Rainmaker
509,648
Ann Heitland
Retired from RE/MAX Peak Properties - Flagstaff, AZ
Retired from Flagstaff Real Estate Sales
NAR is a mix of good (the research resources) and the bad (when they support Congress people in a district whom my clients hate). So many realtors are part time business people and fulltime members of the NAR social/political club that I'm pessimistic about the possibility of change.
Jul 19, 2007 07:40 AM #38
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Bill, thank you for your excellent input. I believe that the last Bob Mitchell’s comment contrasted with previous generalizations –was very specific. Under normal circumstances, any attempt to influence NAR by a few individuals would be totally impossible. I happened to believe that it might be worthwhile to try because of the following reasons:

  • Ongoing DOJ law suit against NAR
  • New market entrants showed that bypassing realtors might no be impossible; there is growing concern shared by NAR leadership and ranks.
  • Growing market discontent with realtors (blocking competition and cheaper solutions, etc.)
  • Growing discontent among Realtors about lack/faulty leadership from NAR leaders
  • Emergence of blogging as a powerful tool to challenge a status quo and misinformation (an example is Dan Rather’s demise from CBS as a result of bloggers input)

So, we could start with several things, such as:

  • Collect more examples similar to the one by Bob Mitchell – illustrating unresponsiveness of NAR to Realtors input and leadership’s lack of understanding of the public impact of their policies.
  • Grow grass root support and create Realtors lobby
  • Outline suggested reforms to NAR including policies, mission statement, objectives, organizational structure and the way to select NAR leadership, etc.
  • Develop strategies of involving NAR leadership into discussion with Realtors lobby
  • Excerpt pressure on NAR leadership

Will it work? There is a very small chance but with changing situation and growing public and Realtors discontent there is a chance.  So, possibly, it might be worth to try. Bob, if you believe we should try – let’s involve our colleagues, send this message around and see if we can get something going. What do you think?

Jul 19, 2007 04:13 PM #39
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Ann, you made an excellent and important point and let me restate it.  There are many, many things NAR did and is doing very well.  After all, the majority of NAR are us, hard working agents and brokers who try to excel in their service to customers. The problem is a disconnection of the NAR leadership from the market realities and their inability to modify the system to adapt to changing business landscape. To give them a credit – no one at the moment has a power to change the system as it reached a “consistency of magma hardened over the centuries” (sorry for this slight exaggeration). Unless you put the heat under the NAR leadership (a lot of it) nothing will change.  If we don’t do that ourselves and DOJ do it first (puts enough heat under the NAR leadership), we might loose years of Realtors progress and accomplishments.

Jul 19, 2007 04:29 PM #40
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Hi, I would like to bring your attention to an interesting post by Beth Butler "What happens if MLS goes away."
Jul 19, 2007 07:24 PM #41
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Lenn,

You are an extremely accomplished broker and blogger and you produced many high quality posts on AR. As a matter of fact, I complimented you on a great job you did on your Virginia post yesterday. While searching for different posts on NAR and MLS I found this post. To my surprise I realized that you are commenting on my post Good and Bad Things about NAR: Can We Fix NAR? Why am I surprised? I am surprised because you didn’t do it in the comments section of my post, but you prepared your own post.  Additionally, you even didn’t bother to notify me about this post to give me a chance to respond. Moreover, you seriously misrepresented my position. It is very surprising from accomplished and respected broker like you.

The only comments you made on my post are as follows:

“It all sounds very good Artur.  However, your post asks duties of the NAR that are not it's core purpose.  See: NAR's Mission and Vision
Mission
The core purpose of the NATIONAL ASSOCIATION OF REALTORS® is to help its members become more profitable and successful.”

Subsequently, you published this rebuttal to my post without notifying me about it to give me a chance to respond. After carefully studying this post, I understand why.

Let me clarify my post and my position:

  •       My post is not about the DOJ lawsuit against NAR. I am merely opening my post with a referral to the lawsuit. My post is about good and bad things NAR did and is doing. As a matter of fact, my post triggered a very a lively and informative discussion on this subject and I welcome you and your readers to join it.
  •         I did not say that NAR “should change the focus from that of protecting Realtors to protecting "the interest of customers we are supposed to serve."  In my reply to your above comment I said: “Let's amend the NAR mission statement and include client’s interest as well. That's the problem of all unions and trade associations. They think just about themselves.”  I do not propose capitulation. I opened a discussion on how to prevent a disaster. It happened that NAR leadership misrepresents of what most of us, agents and brokers, sincerely wants. We want to do our job as well as we can. Let’s market place to decide how high commissions should be. NAR’s position is ill defined and jeopardizes years of NAR accomplishments. NAR is powerful and rich, but do you remember how powerful AT&T used to be before DOJ sued them?  
  •       Lenn, you are right – the government is not always right. But what often matters more is a public perception. And public is not favoring realtors’ position. Why? Because NAR and MLS stifled our progress for years and now, once a few start up companies demonstrated that they can satisfy different needs of clients, NAR and MLS failed to notice. All of us might dearly pay in the future for the NAR leadership’s lack of vision.

Lenn, have you noticed how MLS is rapidly changing over the period of last several month?  This is a direct result of the competition from Zillow and Trulia. MLS is changing because it is scared. It is scared not of Zillow and Trulia. It is scared of enthusiastic public response to their services. This response clearly showed MLS and NAR leadership vulnerability and failure. They failed to notice that clients’ needs are changing. Couldn’t we provide services similar to those offered today by Zillow and Trulia years ago? We certainly could, but NAR chose its own interest (not ours – agents and brokers) over interest of clients and chose to suppress our creativity.  This is why it is time that we “get our act together” and reform NAR before others do it for us. Please, join discussion on how we can accomplish it.

I welcome your rebuttal, but I would appreciate it even more if you have not misrepresented my position and gave me a chance to reply by informing me about it.

Jul 19, 2007 11:52 PM #42
Rainer
32,767
Beth Butler
Beth Butler - Big Mouth Consulting - Miami, FL
Artur - I am happy to see this discussion is now on 3 posts - it's a ground swell of sorts.  Unfortunately, so many of us get consumed with our day to day issues that one day we look up and our world seems to have changed overnight.  That is the worst position to be in from a business perspective.  I think AR provides an awesome platform for these discussions in a way that NAR is lacking - I just wish we had AR 5 years ago or that NAR had opened up these discussions in this kind of format long ago.  There is no dismissing the consumer movement towards information.  As an industry, we have given a peek but never given full access.  I can remember back when there were MLS books and there were big fines associated with giving those books away.  I never understood that- forcing someone to seek you out just to get information that now can be readily found just makes us look like that is all we have to offer.  Let's keep this going!
Jul 20, 2007 12:38 AM #43
Rainer
155,559
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Artur:  Please feel free to reference my posts or comments when ever you feel. 

Beth:  I haven't read your post that Artur refers to above yet, but will shortly.  The MLS "monopoly" on the listings is the biggest asset that NAR and it's members have going for it.  As I pointed out above and in my posts on "Realtor.com", it is this monopoly (or something close to it) that makes Realtor.com the number one real estate web site.  No where else can you go and expect to get nearly as complete a list of properties that are on the market, therefore, that's where the people go.

Similarly, protecting the data that is on the MLS works to our interests.  I have a friend who thinks that we should do away with yard signs because then people would be forced to call an agent to find out what was on the market!  A bit extreme, but it illustrates my point.

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Jul 20, 2007 03:02 AM #44
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Bob, thank you very much.  I will publish a sequel soon to keep things going. MLS and Realtor.com are tremendous assets, no doubt about that that. Realtors have a lot to loose.

Jul 20, 2007 07:41 AM #45
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Beth,

Thank you very much for your comments. I love your statement"I never understood that- forcing someone to seek you out just to get information that now can be readily found just makes us look like that is all we have to offer.  Let's keep this going!".  NAR and MLS are changing, but too slow. Zillow and Trulia demonstrated to us that NAR overplayed its hand and the monopoly might be gone very soon. It is always smart to share and now things might be totally out of NAR's control.

Jul 20, 2007 07:49 AM #46
Ambassador
580,127
Julie Chapman
KB Home - Tampa, FL
New Homes Sales Tampa Florida

Since price fixing is a violation of the Sherman Antitrust Act and I have never considered breaking this particular law (expensive fines), I have no fear of the DOJ but do fear that the NAR is not moving with those of us who are here to stay no matter what our business model.

There are more than 42000 Active Rain members.  We need to reach out and touch the NAR as a group before they do irreparable harms. 

Aug 11, 2007 11:48 PM #47
Rainer
155,559
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)
In regard to Julie's comment, I have become convinced that NAR's actions and the needs of the real estate community and it's members have become disassociated. Bob Mitchell ValueList Real Estate Services, Inc.
Aug 12, 2007 04:01 AM #48
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Julie, I certainly agree. NAR leadership can do irreparable harm.  They seem to be in the state of denial and never heard about Judge Green and AT&T case. Active Rain is a great forum and good way to reach the community. Thank you for your comment.
Aug 12, 2007 08:29 AM #49
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Thank you for your comment Bob.
Aug 12, 2007 08:29 AM #50
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