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Remember Who You Are

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This is something I’ve been thinking about for the past couple of weeks, but in truth, it’s something I’ve been talking about for years.

The REALTOR Associations must remember who they are. Because they have forgotten the faces of their fathers.

The issue comes up again because of this speech by Bob Goldberg to the NAR Board of Directors at the recently concluded NAR Convention. In it he says:

First and foremost, it’s imperative that we are not just the National Association OF REALTORS®, we are also the National Association FOR REALTORS®. Every action we take is geared to making sure our members come first.

He goes on to list a number of initiatives that NAR will undertake to become the National Association FOR REALTORS. They seem like reasonable efforts, and I take no issue with any of them specifically (yet).

My issue is simpler and more profound: The National Association FOR REALTORS represents a complete departure from the origins of the REALTOR Movement and strips organized real estate of nobility and high purpose.

This cannot be what Bob Goldberg and the NAR Leadership Team, from President Elizabeth Mendenhall on down, want for NAR. I know them to be good people who got involved for the right reasons and want to change the direction of organized real estate to reclaim its greatness. I hope that they will respond publicly, whether here or elsewhere, to let us all know that this National Association FOR Realtors business is just a rhetorical flourish.

If not… the future is grim indeed. Let me explain.

The Origins of the REALTOR Movement

To begin, watch this video by REALTOR Doreen Roberts:

It is obvious that the founders of the National Association OF REALTORS were driven by the need to protect consumers and the public.

Fraud, misrepresentation, forgeries, lies, swindling — these were commonplace in the real estate business of the late 19th and early 20th centuries. “Curbstoners” were not rare exceptions, but far too common for honest businessmen to tolerate.

As Ms. Roberts says:

The board presidents were asked what goals the proposed organization should have. Their replies were first, for standards and ethics in business practice; second, for exchanging information and statistics on the real estate business; and for all involved to promote real estate ownership and development. Separating themselves from unethical sharks and curbstone brokers was a primary concern.

That is the origin of the REALTOR Movement. That is why organized real estate exists at all.

Later on, Ms. Roberts notes that upon the adoption of the very first Ethics of the Real Estate Profession by the National Association of Real Estate Exchanges (the forerunner to National Association OF REALTORS), “the shift from let the public be damned to let the public be served was complete.”

That is the origin of the REALTOR Movement. That is why organized real estate exists at all.

The Code of Ethics, the document that distinguishes a REALTOR from a mere licensee, embodies this concern for the consumer and the public. From the Preamble to the Code, which I quote a lot:

Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization. REALTORS® should recognize that the interests of the nation and its citizens require the highest and best use of the land and the widest distribution of land ownership. They require the creation of adequate housing, the building of functioning cities, the development of productive industries and farms, and the preservation of a healthful environment.

Such interests impose obligations beyond those of ordinary commerce. They impose grave social responsibility and a patriotic duty to which REALTORS® should dedicate themselves, and for which they should be diligent in preparing themselves. REALTORS®, therefore, are zealous to maintain and improve the standards of their calling and share with their fellow REALTORS® a common responsibility for its integrity and honor. [Emphasis added]

I love these words. Who could not? They ring of concern for not just the buyer and seller, but for the public, for the interests of the nation and its citizens. They talk about grave social responsibility and a patriotic duty. The REALTOR Movement, at its heart, is a patriotic, public-minded, socially responsible movement. They are every bit as inspiring to those of us who work in the real estate industry as the Declaration of Independence is to the American people.

You know what’s missing from the entire history of the founding of NAR, the creation of the Code of Ethics, and the Preamble to the Code of Ethics? Any notion that the organization created to serve the public is at all concerned about the financial well-being of its members.

In fact, Ms. Roberts’ video mentions Charles Chadbourn, the former President of the Minneapolis Board, who coined the term “REALTOR”, who wrote in 1922:

The word REALTOR signifies more than merely board and National Association membership. The true REALTOR is a man of high ideals. He has made the Code of Ethics of the National Association a part of his personal code of honor. He would rather lose a record-breaking commission than violate his own conscience.

The basic assumption that underlies both the Code and the REALTOR Movement is that by serving the public, by living up to his grave social responsibility and patriotic duty, the REALTOR will succeed in business as well. Organized real estate need not be concerned about business or financial success of its member; it only needs to be concerned about the standards and ethics, and the promotion of public interest.

That is why it is the National Association OF REALTORS — an organization comprised of men and women who have made the Code of Ethics a part of his or her personal code of honor. They band together to serve the nation and its citizens, by holding themselves to higher ethical and business standards, and by promoting public policies that benefit the wise utilization and widely allocated ownership of land.

That is an organization worth supporting, and a movement that inspires. It is why I continue to work in real estate, banging by head against various brick walls. Because an organization of such high-minded, frankly noble, individuals pursuing such noble ideals is one worth preserving and empowering.

National Association FOR REALTORS Is Just A Union

Richard Trumka, CEO, AFL-CIO

If the phrase “National Association FOR REALTORS” is more than a rhetorical flourish, if it means what it says, then we are talking about a complete departure from the origins of the REALTOR Movement and a betrayal of its noble ideals.

No longer does the nation and its citizens come first; no, the concerns of the members come first. No longer is NAR an organization of likeminded individuals who band together to enforce professional ethics and standards on each other, and to promote public policies beneficial to the republic.

It is, instead, something much closer to a labor union which is concerned only with the wages and working conditions of its dues-paying members. And one must ask… if the REALTORS are worker, who is the management? Who pays their wages?

In that vein, check out what Bob Goldberg, CEO of NAR, said to the Board:

We are creating a new Strategic and Business Technology Group that will focus on engaging with world-class innovators to keep NAR ahead of industry disruption. NAR will seek to form partnerships with major players and industry experts that will benefit our members and improve their profitability.

We have plans to build a strategic think tank to capitalize on opportunities while mitigating industry threats.

Engaging and serving our members will always be our top priority, but we are also harnessing relationships with consumers. For example, this week we utilized the consumer Call for Action Program to encourage homeowners to make their voices heard. [Emphasis mine]

None of the above displays any concern for the public interest. “Benefit our members and improve their profitability” is nowhere in the history of NAR, the history of the Code, and the Code of Ethics itself. It is an inversion of the basis of the REALTOR Movement.

Engaging and serving members is a good thing to do, but that can never be the top priority for the National Association OF REALTORS… at least if NAR has not forgotten who it is and where they come from. The top priority is and must always be the protection of the consumer and the furthering of the public interest.

If not, if NAR really is about enriching its dues-paying “members”, then as a non-REALTOR who nonetheless has to buy and sell homes during my lifetime, therefore paying these REALTORS a commission, why in the world would I want to support that organization? If NAR’s top priority is benefitting its members and increasing their profit margins, why as a regular taxpaying citizen should I look at NAR as anything other than yet another special interest group?

Confusion About Members

I don’t blame Bob Goldberg for his statements and for his strategy. After all, he’s doing what he thinks is best for NAR as a business, and improving your service to your customers is always what is best for a business. And to be sure, if NAR is not going to remember who it is, it would be better to be a customer-oriented business than one that ignores them.

But he continues to conflate “customer” with “member”, which both stems from and contributes to the forgetting of who NAR is and where it comes from. And this is a common issue, as almost all of my consulting work with Associations involves asking the question of “Who is your member?”

Most Association Executives and Association leadership do not even understand the question. They’ll say things like, “We have 3,500 members; what do you mean who is the member?” Once they realize what I’m asking, they’ll respond, “Well, everybody who pays dues is a member.”

The problem with that line of thinking is that roughly 70% of the “membership” has been forced to join, according to an Inman Special Report. Those people aren’t “members” in any significant sense of the word; they’re hostages.

And that simple fact comes up time and again in any discussion about “members.” For example, the national response rate to REALTOR Party’s Call for Action is about 15%. For an organization founded on the principle of advocating public policy, that’s an astonishing figure. For another example, ask your AE what percentage of members voted in the last Association election for Directors or such. And prepare not to be surprised if that number is in the single digits — as in, 5% of the membership voted to elect so-and-so as Vice President of the Association.

So they don’t vote. They don’t answer Calls for Action. They don’t contribute. They don’t attend meetings. They often don’t agree with you on public policy. What makes you think they subscribe to the Code of Ethics and its ideals of professionalism for the sake of the public?

Those aren’t members in any serious sense of the word. They might be customers, willing or not, of the Association (or more likely, the MLS that requires REALTOR membership). But they’re not members.

And yet, those are the people the Association should prioritize in engaging and serving?

Remember the Face of Your Father

I don’t think Bob Goldberg meant to suggest such a dramatic shift for NAR. I think he truly wants to serve the members, and his background at NAR has always been in the member services area. I also don’t think that Elizabeth Mendenhall, John Smaby, or Vince Malta (the next three Presidents) sat down and did some philosophical deep-dive about the meaning of membership and the origins of the REALTOR Movement. Because that’s not their job.

But Association Executives, Directors, Committee members, true-blue REALTORS who give a damn really need to remember who they are and where they come from. National Association of REALTORS didn’t spring up into existence overnight; it has a history that spans over a hundred years. There have been thousands of men and women who came before them to pave the way.

What they intended was not an organization that is about the self-serving interest of so-called members. None of them worked so hard at thankless volunteer jobs to create a union that looks out of the financial interests of its members.

Because they came up in a world of cheats, frauds, and curbstoners and saw first hand the harm that they were doing to buyers, sellers, the industry itself, and to the nation. They saw rightly that under all is the land, and that upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization. They understood clearly the connection between private property ownership and freedom, and the connection between business standards and ethics and civilization.

I submit to you that the REALTOR Movement did not begin in order to make REALTORS rich. It began to help buyers and sellers achieve the American Dream, and to provide a level of trustworthy service in pursuit of not just selfish ends but of the nation and its citizens. I submit to you that the REALTOR Movement is ultimately a patriotic movement concerned far more with the public well-being than the pocketbooks of its members. And that is why I, as a non-REALTOR, love the movement and what it stands for.

Today’s National Association OF REALTORS, along with all of the State and Local REALTOR Associations, could and should engage in that conversation. Do the concepts and ideals of 1908 still resonate in 2017? Do the words of the Code of Ethics, from early in the 20th century, still matter in the 21st century? Who are we? Where do we come from? Why do we exist?

All of those questions are vital today. In fact, they’re even more vital today than ever.

Which will you be, NAR? An outwardly focused, public interest organization, made up OF men and women who have internalized the Code of Ethics as part of their own personal code of honor whose first concern was, is, and remains the public good? Or an inwardly focused, special interest organization, which works FOR people who wonder what they’re getting for their dues dollars?

Remember who you are.

-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.

24 COMMENTS

  1. This industry will forever be threatened as long as it pretends that its best interests are above those of the consumer. Importantly. What would the National Association of Consumers (if it existed) say today about the value of what we do and the processes we use to facilitate home sales and purchases? Critically. Organized real estate, franchisors, franchised brokers and even independent brokers have all forever dodged, struggled and avoided aligning the promise of their brands – and most importantly what they represent to the consumer – as defined by 2 million licensed wildly independent contractors that do everything “their way.” If you are not clear who your customer is, then the failed result of what you are doing will soon become very clear. So what’s in your offer to the consumer? What do you do for the consumer every single day and how are you evolving your brand to be the one the consumer prefers, not just a brand agents want to hang their license with based upon a greater commission rate? If you exist simply to provide the random offer of services from some percentage of those 2 million agent licensees delivering 2 million different ways to do real estate, then I rest my case. And as you should by now realize, Winter is coming.

  2. The conscience/high ideals thing may have been true in 1922, but it isn’t now – I see unethical behavior every day that is driven by commission-first agents. We should just quit the whole Code of Ethics charade (the Big Lie to the public) and then see if NAR has anything to offer.

  3. When I joined the Army, I took an OATH! My paycheck was small. I served my country, and upheld my oath. When I became a REALTOR – I wrote a check, and barely knew about a code of ethics. I grew to understand and live by the code, but I joined because I had to for MLS. YES, NAR needs to attract members – and I’m a Pollyanna, but I wonder if the only attraction is “How to make members more money”. Perhaps we have a few Americans who still believe in Code, Honor, Ethics – and perhaps our marketing message should be BOTH?

  4. Rob, You always, always provoke me to deeper thinking! Thank you!
    Most of the time, my thinking is short sighted, looking at the obvious. This article
    has me thinking long term and deeper than ever. OF or FOR? That will be a defining question!

  5. Rob, you end with “Which will you be, NAR? An outwardly focused, public interest organization, made up OF men and women who have internalized the Code of Ethics as part of their own personal code of honor whose first concern was, is, and remains the public good? Or an inwardly focused, special interest organization, which works FOR people who wonder what they’re getting for their dues dollars?” Why the necessity of “or” which presumes incongruent ends? In today’s reality (and tomorrow’s as well), NAR needs to be successful in both endeavors. They are not mutually exclusive.

  6. At some point consumers are going to demand better from all of us. Will it take government intervention? Possibly. Or maybe it will take more voices like yours to shine the light on what needs to change. Keep fighting the good fight.

      • Some consumers are demanding better already, but a vast majority don’t know what real service from a Realtor looks and feels like. If they were demanding a better experience, the industry would be forced to change. But the small percentage that is demanding excellent service hasn’t been enough to weed out the bad agents.

      • License law doesn’t go far enough. Government intervention like they have done in British Columbia – huge penalties for Brokers, new Commissioner with carte blanche to make new rules, agents losing licenses, etc.

    • A highly trained, efficient, ethical agent still will not have the ROI for the broker that a green person with a ready circle of friends has. We live in a disposable society, use it and throw it away. When we had the FIRST NAR Quadrennial Ethics requirement, just under 1/3 of our membership at that time had been in the business more than 4 years. Sixteen years later, the ratio isn’t much different.

  7. (Rob, something is wrong with the comments form — it is prefilling name and email with the previous person who made a comment! latest win 10 + Firefox 56.0.2
    ps great post. )

  8. This is a phenomenal article. I don’t see much difference today from when the NAR was born when it comes to swindling consumers, with refinances and selling MBS on Wall Street. Your point is well-taken with this Realtor: the National Association FOR Realtors is nothing more than a union. We don’t need more unions. Besides Realtors are not employees, but independent contractors.
    The NAR and Realtors will feel it when consumers can start buying homes on Amazon. It’s coming, and consumers, especially Millennials, will use that “buy button.” Not much expertise needed when Realtors become hosts and hostesses, essentially door openers.

  9. If the National Association FOR REALTORS would be akin to a union, what of the “closed shop” and “right to work” legal principles? Going by my local’s statistics, for the last call for action (Income Tax Reform) 85% of the members didn’t give a hoot or maybe even know about the tax reform issue. Extend that percentage to NAR on a whole and it means that 1.02 million “members” don’t believe in the company vision. In response, NAR has an ingenious way of getting money from the 85% that would rather not join, but still benefit from the work of the 15%. The Broker of Record’s dues are based upon the number of licensees employed.

    Bob Goldberg is certainly trying to address this obvious existential crisis by sending his top brass out to visit the states, but will the 1.02 million even be aware of that effort. How do you convince that mass of people that they are missing something? “What’s in it for me?”

  10. The AE of our local board said to me (in response to a rhetorical question) “You cannot dictate ethics”, sad but true! Like Greg Fox commented about taking an OATH (I did as well) he took it seriously and takes the REALTOR code of ethics seriously as well as do I….. I love everything you have written and whole heartedly agree, the business of NAR should be about the consumer, About the Land beneath us, not so much about being PROFITABLE at the expense of the consumer. Charles Chadbourn is now my hero: “Charles Chadbourn, the former President of the Minneapolis Board, who coined the term “REALTOR”, who wrote in 1922:
    The word REALTOR signifies more than merely board and National Association membership. The true REALTOR is a man of high ideals. He has made the Code of Ethics of the National Association a part of his personal code of honor. He would rather lose a record-breaking commission than violate his own conscience.”
    As Always Mr. Hahn your insights and gift of putting your thoughts into words is phenomenal! Thank you

  11. I am especially fond of “high-minded” Rob. This is one of your best ever.
    Thank you for stating so plainly that principles matter. Most.

  12. Moderating roundtable of large local presidents in Chicago, I cited your May blog that explained difference between professional and business person. The topic was association role in member professionalism. This is a great follow up Rob, spot on.

  13. In California, the Association leadership has committed its “members” to a seeking sweeping change in our property tax law with no apparent discussion at all of the implications for the wider public, for the schools, for the many potential implications of budgetary shortfalls and the potential backlashes. Yes, if it becomes a referendum that passes, it will surely generate more sales and put money in agent pockets in the near term, and some members of the public will have new choices, but everyone will pay the cost and there may be significant unexpected consequences down the line. I share all this because I think CAR has made a decision exactly in the spirit of the Nat’l Assn FOR Realtors (with maybe a dollop of anti-tax libertarianism).

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