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Editor’s note: This article has been updated to correct that fees paid by CAR members to access the regional MLS, MRED, are collected by CAR, not MRED, and include a markup that’s charged by CAR.

As two rival associations move forward with merger plans that would make them the largest in Illinois, the Chicago Association of Realtors says it will cut its dues by $30 a year.

CAR says it’s cutting local dues for agents and brokers to $234 a year in response to concerns expressed by some members about rising costs elsewhere in the real estate industry — and as a thank you to members "who continue to work hard to help rebuild the real estate industry in a tough economic environment."

CAR CEO Ginger Downs said the Chicago association’s board of directors began discussing a dues decrease in March, when the National Association of Realtors announced it was considering a $40-a-year dues increase to fund political activities.

NAR’s board approved the increase in national dues in May, despite warnings from some local association executives that a dues increase would accelerate membership declines.

That will push NAR’s 2011 dues to $120 a year, plus a $35 assessment for a public awareness campaign. Illinois Realtors also pay $99 in state association dues, plus a $50 fee for an advocacy initiative.

All told, local state and national Realtor dues for Chicago association members will total $538 next year — $30 less than some might have been expecting.

Chicago association members also pay CAR $260 a year to access the regional multiple listing service serving the area, Midwest Real Estate Data LLC (MRED), and brokers pay CAR $440.

An MRED spokesman said it provides MLS access to local associations at a wholesale price, and that the MLS fees associations charge their members include a markup. MRED does not differentiate between brokers and salespeople.

At just over 1 million, NAR membership is down 26 percent from a peak of 1.37 million in October 2006. NAR figures show membership in the Illinois Association of Realtors has fallen 25 percent from a peak of 56,968 in 2007, to 42,609 in 2010.

Last month, the boards of two suburban Chicago-area Realtor associations — the Mainstreet Organization of Realtors (MORe) and the Realtor Association of Northwest Chicagoland (RANWC) — agreed to a merger that would make MORe the largest Realtor association in Illinois, with about 16,000 members.

One stated goal of the merger plan is to realize cost savings and economies of scale that would help MORe hold the line on local dues — currently $140 a year — in a time of declining membership. MORe’s membership has been dropping at a rate of about 7 percent a year for the last two years.

Downs said CAR has seen similar membership declines, falling from a peak of about 17,500 in 2006 to around 12,500 today.

While the Chicago market is doing well in many regards, she said, many members aren’t handling the volume of sales they did in the past, and many transactions involve distressed properties.

"We’re aware that everything is very price-sensitive right now, and we are doing what we can to hold the line on costs," Downs said. "My staff and finance committee drilled down to see where we could find organizational efficiencies, while increasing services to members."

The Chicago Association of Realtors plans to offer new member services, including an expanded lineup of educational programs, a technology conference, and an educational expo with Freddie Mac that has an education component related to short sales.

A $30 dues reduction for 12,500 members would translate into a $375,000 reduction in annual revenue — more than the $284,887 budget surplus that CAR enjoyed in 2010.

Asked if CAR will need to cut staffing or other expenses to make up for lost revenue, Downs said the association has already trimmed its staff, largely through attrition, and "we are where we need to be to provide services."

She said the association plans to boost affiliate membership, sponsorships and business development, and also grow non-dues revenue such as fees the association charges for educational programs.

One way associations are looking to cut costs is through consolidation and mergers. Larger associations enjoy greater economies of scale and can have more negotiating clout with vendors who provide services.

The Chicago Association of Realtors, MORe, RANWC, and  the North Shore-Barrington Association of Realtors are already collaborating on regional issues through the Community Alliance of Chicagoland Realtors.

Downs said MORe pulled out in the early stages of 2009 merger talks between the four associations, and at the end of a due diligence process RANWC and North Shore-Barrington decided not to proceed with a merger with the Chicago Association of Realtors.

That paved the way for merger plans by MORe and RANWC, which are pending approval by association members.

Downs said such mergers are good for the industry, and that although there’s nothing in the works at the moment, "if the opportunity presents itself I’d be willing to explore" further talks with MORe or North-Shore Barrington. MORe board president Christine Chase did not immediately respond to a request for comment.

"Our offices stretch from Wisconsin to Michigan," Downs said of the four associations that were exploring consolidation. "Our formal jurisdictions have no connection … to where our offices are located. That’s why I thought, ‘Why aren’t we one board?’ "

She acknowledged that CAR competes for members with MORe and other associations in the Chicago market, but said there’s nothing new about that. Although CAR is looking to attract new members, it’s focused primarily on the "huge commercial non-Realtor population base in the city of Chicago," she said.

"The reality of it is that in good times and bad, every association is in competition with other associations in the state," Downs said.

A recent NAR survey found Realtors have cut their business expenses nearly in half in the last six years, slashing spending on everything from marketing and promoting their own businesses to professional development and technology products and services. Realtors spent an average of $8,210 on such expenses in 2004. Today, that number is just $4,270.

According to the Chicago Association of Realtor’s most recent nonprofit tax filing, it racked up slight budget deficits in 2008 and 2009, but revenue exceeded expenses by $284,887 in 2010. Disclosures from previous years show it spent $129,510 more than it took in during 2008, and that expenses exceeded revenue by $165,387 in 2009.

The association’s 2010 expenses totaled $5.53 million, including $2.59 million in salaries, compensation and employee benefits. The association generated $5.81 million in revenue, including $3.4 million in membership dues and $575,000 in member fees.

The association finished the fiscal year ending Sept. 30, 2010 with $1.8 million in net assets and fund balances, up from $1.48 million at the same point in 2009.

Although its revenue has been falling, the Chicago Association of Realtors been able to make even deeper cuts in expenditures. Its expenses were down 12 percent last year compared to 2008, when they totaled $6.3 million. Revenue declined 6 percent over the same three-year period, from $6.18 million in 2008, the group reported.

Tax filings show one way the association has reduced expenses is by cutting its payroll. Employee compensation and benefits were down 9 percent last year from their 2008 level of $2.85 million.

In 2008, Downs earned $350,772 in salary and benefits, and was also granted a $10,287 expense account and other allowances. Chief Operations and Finance Officer Warren Frank earned $186,115 in salary and benefits. By 2010, Downs had taken a 6.5 percent pay cut, earning $327,812 in salary, incentives and benefits. Frank’s compensation was down nearly 5 percent from 2008, totalling $176,997.


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