For whatever reason, there’s quite bit of chatter going on around the RE.net about the future and role of the REALTOR Association. This Facebook Group is more or less ground zero of the discussion. But I saw an interesting take on the topic from Victor Lund, the influential proprietor of the WAVGroup. Here is his post, worth reading in full:
Remember this leadership statement?
“Let every nation know… that WE shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, to assure the survival and the success of liberty.”
More than any political speech, this was the voice of a committed leader.
Who the hell is that crazy neocon Bushitler-sounding warmonger? It’s patently obvious that the Rethuglicans are a danger to global peace.
Anyhow, Victor then goes on to quote Jeremy Conway:
Today Jeremy Conway, my most highly respected industry mentor answered the question.
Is everything NAR does perfect? Certainly not! Is everything NAR is currently doing supportive of everyone in the real estate space? Certainly not! However:
For those who perceive a threat in the present situation, NAR is a suburb [superb?] lifeboat.
For those who perceive the opportunity begging to be discovered in the present situation, NAR is one of the most powerful battleships afloat.
For those who deny any situation exists, NAR is a great insurance policy.
Most importantly, NAR and its local association system are a magnificent action resource that can, with a little effort, be ready, willing and available today with tools that can affect the best result.
As I read these words, I recalled the words of one of our Nations’ greatest leaders once again.
“The world is very different now. For man holds in his mortal hands the power to abolish all forms of human poverty and all forms of human life.”
These are words of empowerment. These words told a nation to contribute to fighting hardship. These words that told a nation that the future was in their almighty hands. Surely, at nearly 1 million strong, REALTORS® have the potential to create their destiny. “Let the word go forth… that the torch has been passed to a new generation” of REALTORS®.
Stirring, indeed… if you’re into all that warmongering Republican rhetoric, anyhow. Wait, what? That wasn’t some Reagan-worshipping Tea Partier? That was John F. Kennedy? That guy who dated Marilyn Monroe?
Okay, smartassery aside, I don’t know if Victor meant to get so close to the heart of the question that confronts the REALTOR Association today, but he did. All he had to do was to use the more famous quote of one Jack Kennedy:
Ask not what your country can do for you, but what you can do for your country.
I agree with Jeremy Conway that NAR is a “powerful battleship”; I disagree that it is a lifeboat. And in that difference lies the key question of the future of the REALTOR Association. Let me explain.
Why Belong To Any Organization?
There are probably myriad reasons why people choose to belong to some organization or another, but generally speaking, I can only think of three broad reasons:
- They get something from belonging (consumerist)
- They can do something by belonging (activist)
- They have no choice but to belong (unionist)
A clear example of the consumerist organization might be the country club. One joins a country club to gain access to all the goodies — wonderful golf courses, leisure activities, business opportunities, whatever.
Something like the #Occupy Wall Street movement could be thought of as an example of the activist variety. I’m assuming that most Occupy folks aren’t showing up for opportunities to sexually assault young women without penalty. Which means most of them join the organization to DO something, to create some sort of change.
And of course, something like the UAW or the Teamsters would be an example of the third. You join because you have to if you want to keep that job — or in some cases, two functioning knees. Note, however, that unionist organizations quickly develop strong consumerist strains, because they have to justify the forced membership by providing members with benefits that outweigh the costs of joining. Usually, that benefit is a paying job, but it could be other very strong incentives.
Many organizations blend elements of all three motives, but effective ones know which is the core motivation for people to join as members. Country clubs can engage in charity efforts or political action, but they understand that its members join to play golf and sip martinis, not to go visit soup kitchens or agitate for political change. Unions can offer out member benefits, but judging by things like how badly they want to eliminate secret ballot elections (Card Check), they recognize that their members join because they have to. Quite a few activist organizations offer out member benefits and goodies, but they recognize that their members join to advance a cause, to do something, to create change.
The issue for NAR (and by extension, all state and local Associations) is that over time, it has become a bit of all three motivations.
Why Do People Join NAR?
My sense is that the majority (or at least a very very significant minority) of NAR’s members join because they have to. In many cases, the brokerage mandates that they join the Association. If the brokerage doesn’t mandate membership, the Association often owns and controls the local MLS. Even in so-called Thompson jurisdictions, the cost of the MLS is often equal to or less than membership in the local Association, which includes the MLS as a member benefit. The Association also often controls the lockbox, which is critical in many markets. There is a strong unionist component to Association membership.
A somewhat smaller percentage of members join NAR for other member benefits, such as educational programs, discounts with vendors, networking opportunities, and so on. This is the consumerist angle.
This quote from Matt Wilkins is exemplary (and for the record, Matt states that this isn’t precisely his sentiment, but that he believes the majority of REALTORS think this way):
[It] would depend on the value for that extra cost both tangible (included and/or reduced fee products/services etc.) and intangible benefits (increased business because of consumer perception/value of being a REALTOR etc.)
Finally, a fairly small minority join NAR as activists. They’re not looking to get anything out of the Association, but to advance the causes for which the National Association of REALTORS was founded lo these many years ago, “to unite the real estate men of America for the purpose of effectively exerting a combined influence upon matters affecting real estate interests.” And we have the activist angle.
This quote from Lori Bee, an activist in her local Association, is illustrative. She writes about why she joined the Association:
This is precisely why my answer was industry advocacy (politically) on the previous thread. That is the one thing that individual firms, no matter how large, would find difficult in providing to membership. It really takes the WHOLE association to not only to protect our industry but to protect homeownership rights of our consumers. To me, that is the”cause”… It would be too disjointed of an effort for companies to try and do this, separately. And yes, I have seen this effort work on national, state AND local levels, but most REALTORS don’t appreciate the results. But boy, I’d hate to be in this industry without those efforts. If it even still existed.
Is it any wonder that there’s so much talk about the future of the Association?
He’s not quite John F. Kennedy, but there is another President who said, “A house divided against itself cannot stand.”
Well, NAR today is a house divided against itself, with Activists bemoaning the lack of involvement by the Consumerists who in turn chafe that they are forced to join NAR at all and then get lectured at by Unionists who believe that there is something immoral about selling real estate without being part of the House of R.
It canot stand. Not for long.
Three Paths; Consequences Thereof
Actually, there are really only two paths. Antitrust action would likely prohibit the Association becoming a full-blown union, especially since real estate is a licensed activity, and the State is a jealous god who shall countenance no challenge to its supremacy.
The Association can fully embrace its consumerist culture, and relegate activism to the sidelines. Or it can rediscover its activist roots, and relegate consumerism to the side. Both have significant consequences.
Consumerist Path
If NAR decides that it needs to embrace the consumerist mindset of its members (most of them, according to Matt Wilkins), then its first strategic review should focus firmly on three things:
- Value
- Competition
- Market Share
As country clubs compete not just with other country clubs, but with the full panoply of possible leisure activities for its consumerist-members, so must NAR compete not just with other Associations, but with the full range of service and product vendors.
If the value of Association membership is to be judged on the basis of tools, products, and services to help its members increase business, then there is one thing NAR needs to do immediately: buy Realtor.com.
Why? Because among all of the products and services that are offered to real estate agents, the top three most important appear to be leads, leads, and leads. As a national organization, without a direct conduit of consumer inquiries to its members, NAR cannot match the value proposition offered by other organizations/companies that offer products/services to agents. Witness how numerous MLS’s are launching public-facing websites, in order to generate “cost-free” leads to their members; the consumerist mindset will lead inevitably to the Association needing to offer this most-valuable of services/products whether directly or through the MLS subsidiary.
Speaking of the MLS… as long as the Association is willing to embrace the consumerist mindset, the “must-join” aspect is not only acceptable, but good, and should be encouraged. Given the reality of the Thompson ruling, I would urge Association-owned MLS to remove as much of the benefits/tools as possible, and relocate them to the Association. Strip the MLS down, since you have to offer MLS subscriptions to everyone with a valid real estate license. Move the tools and services to the Association, as a member benefit.
From a consumerist standpoint, market share will and should become a major point of concern for the Association. The goal should be to maximize the number of members — unless, like an exclusive country club, there is some benefit to limiting membership. My thought there is to offer out multiple tiers of membership, from a stripped down Basic to a fully -loaded Premium for example, to make sure that everyone who could be a member finds a price point and a service offering that makes sense.
The above goes completely against the way that most Associations and AE’s think about membership. But if you decide that the Association exists to provide goodies to its members, then that is the logical conclusion.
The Activist Path
I don’t believe going down the consumerist path is the ideal solution for the Association. Not only do most Associations — even NAR — lack the infrastructure to compete effectively at providing goods and services to real estate agents, most aren’t set up organizationally to be a “vendor”. There’s far too much democracy, and not enough executive decisionmaking at most Associations.
Which is the way it should be for an organization that isn’t about providing goodies, but about galvanizing action.
I believe that the Association is set up to do the one thing none of the other organizations in real estate do as well: organize people for political action. After all, that is the original purpose of NAR.
And NAR is still one of the most powerful lobbying organizations in Washington DC, while various State Associations are enormously powerful entities at the state level. Politicians running for office court both the money and the support of REALTOR organizations at every level, because they recognize the power that the Association wields come election time. Even at the local level, where fewer numbers of people can make a much bigger difference (ever see how many people vote for something like city council elections?), the REALTOR Association is a major force to be reckoned with.
In my view, then, the strategy of the Activist-oriented Association must begin and end with how to make the biggest impact politically. Everything else is, and should be, secondary.
The current paradigm appears to be that NAR (and by extension state and local Associations) will have impact by (a) size of membership, and (b) amount of political contributions. Lobbyists, after all, are effective only insofar as they can bring either votes or money or both.
However, in the highly-divided political environment of today, with a membership that joins for reasons other than activism (consumerist, or unionist), I do not believe that the Association can be as effective as it could be with proper focus. For example, what is the actual principle that NAR is defending or protecting or promoting?
Some say property rights. Others say NAR defends homeownership, and with it, the incomes of real estate agents; in that, NAR is no different from the American Medical Association, which defends “public health”, and with it, the incomes of physicians. Still others say that NAR is about protecting the public in real estate transactions by promoting professionalism. And yet still others say that NAR’s purpose is to raise the status of the real estate agent in the public’s estimation.
Furthermore, it isn’t at all clear that the members of NAR actually agree with NAR’s position on issues such as the mortgage interest deduction or GSE’s (Fannie & Freddie). Just as the AMA was riven with conflict over Obamacare (“AMA delegates this week spent several hours in an emotional debate–one member who was there called it “knockdown, drag out”–between left wing and right wing members who disagreed over how to weigh in their voice on President Barack Obama’s push for a public plan.”), it isn’t clear at all that there isn’t a significant disagreement within NAR about these hot button political issues.
So what is to be done?
The simple answer? Purge. The. Ranks.
Let Them Go Their Way
As of this writing, I believe that the elected leadership of Associations, and the people who are really involved in Association affairs, are of the Activist persuasion. See Lori Bee above. Every single one of them should read this speech by yet another President who is not John F. Kennedy. I will rewrite it for NAR:
A REALTOR Association cannot be all things to all people. It must represent certain fundamental beliefs which must not be compromised to political expediency, or simply to swell its numbers.
I do not believe I have proposed anything that is contrary to what has been considered the core REALTOR principle. It is at the same time the very basis of our coming together. It is time to reassert that principle and raise it to full view. And if there are those who cannot subscribe to these principles, then let them go their way.
Let them go their way.
First, rediscover your souls. Rediscover your very heritage, dating from that day in 1908: “effectively exerting a combined influence upon matters affecting real estate interests.” That is the reason why NAR was founded; that is the reason why the Association grew; that is the reason why you have members. Those gentlemen (and back then, they were all men) did not join NAR for the latest in social media training, or because NAR promised them some sort of member benefit. The only benefit NAR promised was hard work, sacrifice, and toil and trouble of exerting influence on various levels of government. The dues were not a price to be paid for some sort of value; the dues were financial support for the mission of NAR.
Second, having rediscovered your core mission, start purging. As it is today, only about half of the nation’s real estate brokers and agents belong to the Association and can call themselves REALTORS. And that percentage may be less, since NAR dipped below the 1 million mark recently. Smaller and dedicated beats larger and apathetic every time.
Say you have a million members, but only 10% of them respond to a Call to Action. Or you have 200K members, and 80% of them respond to a Call to Action. The smaller and more dedicated has greater impact. Even in terms of political contributions, what percentage of NAR members contribute to RPAC? In a more dedicated, but smaller, NAR… what percentage of those would contribute and contribute larger amounts to RPAC?
A number of other powerful lobbying organizations have far fewer members than does NAR on a percentage basis. The NRA, for example, widely considered one of the most powerful lobbies in Washington DC, only claims 4.3 million members… out of an estimated 120-150 million gun-owning households in America, some 3.5% rate. But your average NRA member is engaged, passionate about Second Amendment issues, and not only vote, but get involved with both time and money. The American Medical Association, so influential over health policy, supposedly has only 15% of the practicing physicians in the United States as members.
I am of the opinion — I assume not widely shared — that the Association would be strengthened by shedding all of the members who really don’t want to belong, who don’t particularly care about political issues, and just want access to the MLS and the lockbox.
Third, this does mean that dues have to go up and that programs have to be transferred. Suppose that by shedding the members who are not activists, NAR goes to about 200,000 members. If NAR attempts to keep the same programs, staff levels, and so on, dues would need to quintuple to $600 per year (they are currently at $120). The AMA has annual dues of $420 for physicians by way of comparison. But reality is that an activist-oriented Association wouldn’t need to keep so many of the programs around. Much of the education programs, for example, could be done by brokers, franchises, third party coaching organizations, or the MLS. Dispute resolution could be moved to the MLS. And Code of Ethics enforcement would shrink significantly since the number of members have been pruned. (Besides, one might make the reasonable assumption that the members who remain, who are of the activist mindset, might take the Code of Ethics far more seriously.)
The reality is that while dues may need to go up, they won’t go up as much if the Association refocuses on its core mission of political action and sheds ancillary activities.
Divorce the MLS
The main consequence of going the Activist route is that the Association has to divorce itself from the MLS. This is likely the most difficult step for most Associations to even consider.
But to become a truly activist organization, whose members join out of dedication to the cause, one must remove the “unionist” component of people feeling as if they have no choice but to join. The MLS remains the biggest reason why some people feel as if they have to join the Association. During the RPPSI debate, there were a number of people who yelled quite loudly that they don’t want to have anything to do with politics, and that they felt forced to join.
Nonetheless, the MLS is one of the, if not the, biggest contributor to revenues for an Association to finance its activities. The tricky maneuver then, is to ensure financial support for the Association, while divorcing the MLS from Association membership to ensure that only those people who truly believe in the Association’s mission join up.
This is already far too long, so I’ll save thoughts on how that can be accomplished for a later treatment, but in a counterintuitive way, the Association could become stronger than ever by getting rid of those things that it currently considers indispensable.
An Unexpected Benefit
A NAR that follows my prescription for refocusing on its activist core will end up with an unexpected member benefit that has nothing to do with changing policy.
The REALTOR brand would become meaningful. (And I do apologize to the hardcore NAR supporters who maintain that there is all this significant meaning to the REALTOR brand today; in virtually every focus group I’ve been part of, or heard about, the consumers have no idea that there is any difference between a real estate agent and a REALTOR.)
First, by going from roughly one million members to say 200K members, REALTORS go from half the licensees to roughly 10%. If only one out of ten licensees is a REALTOR, who voluntarily subscribe to a restrengthened Code of Ethics, that fact alone will start to have meaning to consumers.
Second, if the Association rediscovers its activist roots, then the REALTOR brand becomes an activist one. Just as the NRA member isn’t just a gun owner, but a gun owner who is an activist for Second Amendment rights, the REALTOR isn’t just a real estate agent, but a real estate agent who is an activist for property rights. As consumers start to be educated on the difference, more and more of them will ask not just “How’s the market these days?” as they would to any real estate agent, but also “So what’s going on with the mortgage interest deduction?” to the REALTOR, whom they know to be a politically engaged activist.
The Question of Relevance
The way that most people are phrasing the issue of Associations is “how can the Association be relevant in the future?” My question is, relevant to whom?
Quite a few people bring up consumers, and suggest that the Association must become relevant to consumers. This, I think, is barking up the wrong tree out of a lack of a sense of mission. Still others suggest that the Association be relevant to real estate brokers and agents, by helping them improve their skills, professionalism, and mastery of technology. Since everyone from each brokerage to every franchise to Zillow, Trulia, Realtor.com to every single vendor in the industry is trying to become relevant in the same way… I couldn’t counsel going down that route.
So relevant to whom? Become relevant to your real members, those who join out of passion, like a Lori Bee, rather than those who join reluctantly because they feel they have to. Become relevant to the core, and let the core become relevant to everyone else.
Become relevant not to the over-broad “consumers”, but to the more narrowly focused “politically engaged homeowners” who might become your allies in protecting property rights.
Battleship, Not a Lifeboat
NAR is a battleship in these troubled times, with an amazing array of resources at its disposal. But a battleship requires people to man the cannons. The sailors and marines on a battleship do not cower down below hoping to find refuge; they rather get up on the decks, get behind a gun, track enemy ships and aircraft, and join in the fight. It’s called battle stations for a reason.
NAR is not, cannot, and should not be a lifeboat in times of trouble, taking on passive victims of circumstances who merely want to be saved.
Ask not what your Association can do for you; ask what you can do for your Association. And all those who are too busy, don’t agree, or would not ask what they can do for the Association… let them go their way.
-rsh
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