NAR could be in the red for the next 3 years

Proposed budget earmarks $18.5 million a year for RPR

WASHINGTON — A budget proposal for the National Association of Realtors projects the trade group will run at a loss for the next three years.

The proposal projects the operating budget’s net revenue will total $1.71 million in 2013 but anticipates NAR will have to dip into reserves for between $614,559 and $727,246 each year from 2014 through 2016.

Balancing the books image via Shutterstock.
Balancing the books image via Shutterstock.

The shortfalls are due to requests for incremental additions to current, not new, programs that “we don’t have the dues dollars to support” but were nonetheless approved by NAR’s finance committee, NAR Comptroller John Pierpoint told attendees at a Thursday forum to discuss the proposed budget at NAR’s Midyear Legislative Meetings and Trade Expo.

One attendee objected that he didn’t want to return home and tell his members that “we’re budgeting for a loss, but hoping for a profit,” and he personally would never run his home or business similarly.

Bill Armstrong, NAR’s treasurer and finance committee chair, agreed. “I don’t want somebody saying I endorse budgeting at a loss because I don’t,” he said.

“But we look at these as an investment. And we have the reserves to make the investment,” he added. “If we spent several hundred thousand dollars, that won’t make much of a difference to us.”

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NAR anticipates its program-level net expenses will total $74.5 million this year, rising to $77.1 million in 2014, $78.2 million in 2015, and $79.6 million in 2016.

A sizable chunk of the $2.6 million difference between the 2013 and 2014 budgets will be the addition of more than $900,000 to the trade group’s marketing and business development program in 2014, to $1.9 million.

Pierpoint told Inman News that increase was mainly due to the expiration of a contract with a non-dues revenue partner. He declined to name the partner or give further details about budget increases to other programs, saying that was not public information.

Other divisions expected to see significant budget increases in 2014 are:

  • Print and online publications, whose budget would rise by nearly half a million dollars to $5.8 million.
  • Executive offices, whose budget would increase by more than $300,000 to $8.8 million.
  • Government affairs, whose budget would rise by nearly $300,000 to $9.6 million.
  • Commercial and global real estate division, whose budget would rise more than $200,000 to $4.6 million.

The NAR program with by far the biggest budget this year, and for at least the next three years, is NAR subsidiary and national database Realtors Property Resource. RPR’s budget for 2013 was $18.5 million. The budget proposal is requesting the same amount each year for the next three years.

NAR’s non-dues revenue for 2013 is an estimated $32.2 million and expected to remain at around that level for the next three years. The trade group’s biggest source of non-dues revenue are its convention and business meetings, coming in at $8.6 million in 2013. That revenue is expected to remain essentially flat in 2014 before rising to $9.2 million in 2015 and 2016.

NAR’s buildings are expected to provide $6.5 million in non-dues revenue this year, increasing to $7.2 million in 2014 and $7.5 million in 2015 and 2016.

The marketing and business development division will generate an estimated $4.2 million this year with an expected decrease to $3.5 million in subsequent years.

“We’ve been feeling the pinch of the times. Our non-dues revenues are still healthy … but it’s not what it was once,” Pierpoint said.

“Each of the categories is slightly reduced, but again still profitable. That helps pay for the greater majority of the governance (and) structure” of NAR.

The budget proposal estimates NAR membership will remain flat at 1.01 million members in 2014, 2015 and 2016. The budget assumes that the current member dues of $120 per year are maintained.

NAR’s board of directors will vote on the proposed budget at its meeting on Saturday.


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