Home MLS & Associations Parsing NAR's Organizational Realignment PAG Report: Part 1

Parsing NAR's Organizational Realignment PAG Report: Part 1

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A reader sent me a copy of the official report from NAR’s Organizational Realignment Presidential Advisory Group, and asked for my thoughts on it. This particular document and associated initiatives have been generating quite a bit of conversation, as one might expect. I heard about the main points at the AEI Meetings in Baltimore, but not having the details, I didn’t want to comment.

Now that I have some of the details, I’m not sure I want to comment. 🙂 It’s a big document, for a big strategic initiative that may change the world of Organized Real Estate forever. I’m still digesting parts of it. I have embedded it via Slideshare above for your reference.

Having said that, of course, offering opinions worth exactly what you paid for them is par for the course for this here blog. At a minimum, I could ask some questions. So, let me try to parse through some of this, in parts.

Overall Impression

Before we delve into the details, let’s be clear on what the goal of this PAG Report is. Dale Stinton, CEO of NAR, more or less laid out the goal — the WHY — of these proposed changes at AEI-Baltimore. I wish I had recorded it, but not having done that, I’ll paraphrase it in my words (which can be denied, of course, and made far more politically correct by NAR’s legal and communications team).

Bottomline: There are far too many crappy REALTOR Associations out there, and it’s high time to start culling the herd.

Remember Stefan Swanepoel’s Surviving Your Serengeti? In it, he talks about the Wildebeest as an example of endurance, but yours truly, in a 2011 review of the book got all cynical up in here:

The natural cynic, like yours truly, might have fun with some of the lessons. For example, the Wildebeest embodies Endurance, and Stefan spends quite a few pages pointing out that the Wildebeest’s journey is fraught with peril, with no guarantees of survival, but exults in the fact that the Wildebeest overcame all of those dangers to become the most populous animal on the Serengeti. I couldn’t help but think, however, that the species as a whole may endure, but individual Wildebeests get eaten. Thousands of them. So one wonders if the real skills of the Wildebeest are (1) fertility, and (2) willingness to sacrifice the weak.

Seems to me that NAR is adopting the Wildebeest mantra of sacrificing the weak in order to protect the herd.

Every single suggestion in the PAG Report is aimed at establishing some sort of minimum standard for a REALTOR Association to meet… or else. The “or else” appears to be termination with extreme prejudice: NAR will revoke the charter of that local Association.

Which makes sense. It isn’t as if NAR has some other way of enforcing compliance on a local Association; each is its own non-profit organization, formed by local brokers/agents getting together. (We’ll talk about this in some later part or another.)

In case you’re wondering, I’m rather a big fan of the overall concept, seeing as how one of my presentations aimed at the Association world is actually titled, “Leaner & Meaner”. While the PAG recommendations don’t go quite as far as some of my radical ideas, they’re good steps forward into the unknown future.

But let’s take a the first two items of the Report: Code of Ethics and Advocacy.

Code of Ethics

The PAG Report starts off by saying that the existing process for dealing with Code complaints takes too long. The process should be shorter and less cumbersome, and “enforcement must be measurable”. Then in bold, the Report states:

This will benefit the members by making the process more accessible, easier to navigate and enforce. It will make REALTOR® members more accountable to the Code of Ethics and result in increased professionalism.

But the recommendations are a bit… less than shock and awe.

RECOMMENDATION: NAR MUST FACILITATE A REVAMPING OF THE PROFESSIONAL STANDARDS PROCESS TO EXPEDITE AN ETHICS HEARING OR ARBITRATION PROCEEDING (i.e., ideally, the process should be significantly shortened through adoption of electronic filing, limitation of continuances, shortening response times without threatening due process, and to use the expedited court systems as a model, and rewriting the manual to simplify and reduce redundancy and long timelines).

Really? The followup is to adopt electronic filing, limitation of continuances, etc.? First of all, these are all sort of vague. “Shortening response times without threatening due process” sounds like something everyone can get behind, but I have no idea what that means.

A more robust formulation might be, “A Realtor will respond within 48 hours, or he will be judged guilty.” Or whatever — lay down some clear rules, clear timelines. Maybe that will take further work, but lacking such specific proposals… what is there to discuss here, really?

An interesting note comes a bit later:

MANDATORY CORE STANDARD: The administrating association shall implement at least one of the following expedited processes:

a. Mediation
b. Ombudsman
c. Citation Policy (in consultation with NAR legal department)

ONE of these? And what the heck is an “ombudsman”? Isn’t mediation already provided, and… what does that have to do with strengthening Code of Ethics compliance? Citation policy… but talk to NAR Legal? How about NAR Legal just give us an aggressive citation policy?

Look, if we’re going to speak plainly here… the issue with the Code of Ethics enforcement is simple: too much secrecy. REALTOR Associations don’t need an “Ombudsman” but an Inquisitor, who proactively goes out and looks for a reason to boot someone from the ranks of REALTORS. They don’t need more mediation, but more public hearings, recorded and made available to the public on the Association website, linked to the REALTOR’s name.

If we’re going to be serious about Code violations, the Association should have a person who goes out and looks for violations, then hauls them up before a tribunal filled with people whose bias is to want to kick people out of the Association. That’s the Inquisitor.

Of course… in order for that to avoid all sorts of legal problems (hence, the “consult with NAR Legal” bit) the Association and the MLS have to be separated. The MLS may be a requirement to be in the real estate business (as per Dept of Justice) but the Association, with its higher Code, is not. So separate the two, and then start booting people from the Association; as long as they still have the MLS, they might not care enough to bring a lawsuit.

Finally, it is my long-held opinion that strong enforcement should be coupled to a reduction of rules. So NAR might want to take another look at the Code of Ethics and reduce it by a big chunk, before going on the enforcement rampage. The 2014 Code of Ethics is 8 pages of double-column, small font on PDF, with 17 Articles. I’ll bet $10,000 that if I picked a REALTOR at random, that person wouldn’t know at least half of the provisions she could be violating. Simplify that to start, and then start enforcing things.

Advocacy

Okay, so I’m biased here, since I’ve been saying for a few years now that political advocacy is the most important work of the Association at all levels, and that it is the past, present and future of the Association if it is to survive. One of my businesses helps Associations do grassroots mobilizing, so my biases should be absolutely clear here. (You can read the original post here.)

I think it’s a great sign that the PAG has taken such a strong stance, at least philosophically, for advocacy as a core mission of the Association. The Report starts like this:

A culture built around the REALTOR® Party Initiatives and the concept of “Vote, Act, Invest” must exist at all levels of the organization. This will benefit the members by increasing participation in the political process resulting in a stronger voice for real estate at all levels of government throughout the nation. The members will better understand and appreciate the value proposition of the REALTOR® Party. [Emphasis in original]

Sounds good to me! But what does that clarion call lead to? The PAG Report lists five MANDATORY CORE STANDARDS for Advocacy:

  1. Include PAC contributions into Association dues, and allow the Association to just make a corporate contribution for the full amount of RPAC goals.
  2. Demonstrate participation in national Calls for Action from the REALTOR Action Center.
  3. Demonstrate participation in state Calls for Action.
  4. “Each association shall demonstrate advocacy engagement.”
  5. Promote the PAC

All of these sound good in concept… but the big missing piece is numerical. #1, 2, and 3 all include language that talks about “adequate proof of participation”. For the national Calls to Action, the Report states that “NAR shall monitor state association participation through the REALTOR® Action Center Response Reports.”

So if the idea is that NAR will check on local and state Associations to see if they’re hitting their metrics, it would be good to see what those metrics are. For example, Calls for Action — I understand from conversations with people who know (senior executives at NAR) — that response rates are around 3%, which is actually good for a trade organization. So if the standard is set at 3%, then all this talk is empty. If the standard is set at 50%, then we’re on to something indeed.

The first Core Standard — about RPAC contribution — is interesting.

On the one hand, RPAC contributions are to be mandated through membership dues: “Unless prohibited by State law, each association shall include in their dues billing a voluntary fair share contribution for the PAC.” That’s shall include, not may include.

On the other hand, the Report allows the Association to just write a check to RPAC on behalf of its members, based on “RPAC established $___ per member”. It seems like an admission that most REALTORS simply won’t contribute to RPAC, because they could give a flying pig snout, so NAR wants the local Association to just pay for those members as if they had contributed.

Leaving aside the technical discussion of hard money vs. soft money that these mechanisms create, this approach strikes me as a sad admission of the lack of engagement by “members” with advocacy. Local Associations will literally write checks to RPAC in order to demonstrate that their members “care”, when in fact, the act of writing that check strongly suggests that their so-called members clearly do not give a shit. That’s why I call such people MINOS, or Members In Name Only.

Power

There are other things to discuss here, but something in #2 makes me wonder out loud. Here’s the language:

NAR shall monitor state association participation through the REALTOR® Action Center Response Reports. If there are signs of insufficient participation, NAR shall investigate and encourage compliance. The state associations shall monitor local association participation through the REALTOR® Action Center Response Reports. If there are signs of insufficient participation, the state association shall investigate and encourage compliance. (Emphasis mine)

I’d like to know what exactly either NAR or the State Association can do to “encourage compliance”. Yes, they can beg and cajole, but if push comes to shove, what can they really do?

The clear answer is “pull the charter” so that the local Association ceases being a part of the National Association of REALTORS. Three things about that.

1. Can NAR really pull a STATE Association’s charter? I mean, say that the California Association of REALTORS tells NAR to go pound sand. Is NAR really going to disassociate the entire state of California with its 100,000+ members?

2. Can a State Association pull a Local’s charter? As far as I know, the charter comes from NAR, not from the State Association. And this is especially poignant in states with large metropolitan areas… and nothing else. Take Minnesota for example. The Twin Cities constitutes the vast, vast majority of the membership of Minnesota Association. Say Minneapolis tells Minnesota to go pound sand (politely of course, cuz they’re Minnesotans, famous for their sweet passive-aggressive thing). What exactly can Minnesota do to Minneapolis Association of REALTORS?

3. Assuming that either can “pull the charter”, just how painful is that to a local Association? What exactly do they lose when they lose the charter? Okay, its members can’t call themselves REALTORS. Holy cow, get the sheriff on the phone and slap your grandma! Or… not seeing as how consumers have never shown that they even know the difference between a REALTOR and a mere licensee, nevermind preferring the former. But what else does a local lose? Insurance coverage? Litigation protection? I honestly do not know; perhaps one of my readers can educate us on what the consequences may be.

This question of power infuses the entire Report. It’s one thing to talk about all the wonderful things that NAR would like to see happen. It’s one thing to call something a MANDATORY CORE STANDARD.

It’s another thing entirely to enforce things. We’ll return time and again to this exact issue. Power might corrupt, and absolute power corrupts absolutely, but the reason why powerlessness doesn’t corrupt is that it’s worth jack diddly squat.

Does NAR and the State Association actually have the power to enforce their will on the recalcitrant locals? What is the nature of that power, and how can/will they enforce these policies?

Otherwise… without power… this could be a lot like Lichenstein demanding, absolutely DEMANDING, that Putin pull out of the Ukraine.

Anyhow, this got long for Part 1. We’ll handle other parts in future installments, perhaps in-and-around Midyear meetings (now called the REALTOR Party Convention) in DC.

As always, your comments are welcome. Given the topic, if you’d like to contact me privately, I’d be happy to post your comments anonymously.

-rsh

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Rob Hahn
Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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