On Sept. 21, the same day that officials at the National Association of Realtors announced the selection of a new CEO, a select group of large real estate brokers, called the Large Brokers Advisory Group, met with Realtor officials in Washington, D.C.
This group of powerful industry executives did not historically receive such red-carpet treatment among the association’s hierarchy. But in the last decade, large brokers who previously felt cut out of the association’s power circle have sought to assert their influence.
In 1997, the association formed the Large Brokers Advisory Group to give a louder voice to executives representing some of the largest real estate companies in the nation. The group would enable large brokers to offer more direct input on NAR’s direction because some felt the association was not truly representing their interests.
Within a few years, 75 representatives from the largest brokerage companies would be given voting rights on NAR’s board of directors, which establishes policy and priorities for the trade group. While the large brokers’ voting rights represent only a portion of the board’s 700 members, the group has direct access to NAR’s top officials, enabling them to weigh in directly on major industry issues.
The rise of large broker input may have played a role in the association’s adoption of an online listings policy that is now at the center of an antitrust lawsuit brought by the U.S. Justice Department. Officials at RE/MAX and Cendant, two of the largest real estate brokerage companies in the nation, in 2003 announced strong support for the policy’s controversial opt-out provisions, which enable brokers to choose where their listings are displayed on the Internet.
And Laurie Janik, general counsel for the Realtor association, said in an October press briefing that one of the issues NAR will defend in the Justice Department lawsuit is the broker’s right to choose where to display listings on the Internet. According to Janik, without that right, large brokers might decide to pull their listings from Realtor-operated MLSs and create their own, a move that would threaten the viability of the MLS.
Large brokers also have weighed in on the contentious debate over who owns property listings data.
In 2004, the Large Brokers Advisory Group asked the association to support the stance that “brokers own the intellectual property rights association with the listings taken by its agents,” according to a memo read during an association committee meeting. Association officials continue to struggle to define language relating to the ownership of property listings.
While an association policy statement, adopted at a conference in May of this year, maintains that listing brokers own property listings and listings content, legal questions surrounding this language led association directors to delay its effective date until June 1, 2006, while a committee reviews whether changes should be made.
Despite these positions on critical industry issues, most Realtors don’t know much – if anything – about the Large Brokers Advisory Group, whose membership, meetings, agendas and recommendations are not publicized, though the group is very familiar to the top leaders of the 1.2 million-member trade group.
An association spokesman refused to provide a list of the large broker group’s members. “In light of the fact that membership is being reviewed, it’s probably not a good idea to release a list,” Steve Cook said last week.
NAR’s president, CEO, economist, lobbyist and general counsel regularly attend the large brokers’ meetings, though there is hardly a trace of the group’s existence at the association’s Web site. The group has two meetings a year, with the next meeting set for March, in Chicago.
“At the time it was formed, there were very few brokers from large organizations involved in NAR,” said J. Lennox Scott, president of John L. Scott Real Estate in Bellevue, Wash., and a member of the group since its inception in 1997. At that time the group was known as the Large Brokers Advisory Council. “It has really opened up communications. It’s a place where we can talk about topics that are coming forward.
“There is a formal agenda and informal conversations. We get updates on what is going on. It’s all about the relationships and this was an invitation to participate to the large brokers – a place where they could get involved and participate,” Scott said. Large brokers now have a higher level of involvement in the association, he said. “It has been a great success and it’s accomplishing its purpose.”
Members of the Large Brokers Advisory group represent about 20-25 brokerages, Scott said. These brokerages also typically are represented in the larger group of 75 brokerage companies that have voting representatives on NAR’s board of directors.
Several members of the Large Brokers Advisory Group are also members of The Realty Alliance, an elite group of independent brokers that formed in 1997 through the merger of two real estate groups – the Mastermind and the Dozen. In 2004, the alliance’s member firms produced about $264 billion worth of residential sales, and its members represented 95,578 sales associates in 2,576 offices.
At the time the Large Brokers Advisory Group was being formed, some NAR officials felt that the Realty Alliance, along with Cendant’s predecessor HFS, were a potential threat to the national trade group’s power. In a 1997 speech, Almon R. “Bud” Smith, executive vice president for NAR, said that “both groups have a sufficient critical mass that if they feel that the Realtor organization won’t become what it needs to in their judgment, they have the possibility of doing things for themselves that we always thought were our prerogative,” according an article that appears at NAR’s Web site.
While some of the group’s members today feel that NAR has made some positive moves to placate large brokers, others feel there is room for improvement.
Chip Roach, former chairman of Prudential Fox & Roach and now a consultant to the company, serves as the NAR liaison to large brokerage companies and attends the Large Brokers Advisory Group meetings. Roach said in a brief statement that he is “honored to be included in this group” and that “some very positive things have come out of the dialogue” between the Realtors group and the large brokers group, though he offered no specific details and was not available for an interview.
Kenneth L. Jenny, an industry insider who is managing director and CEO for tranCen, a residential brokerage services company, who said he knows members of the Large Brokers Advisory Group, said he is still waiting to see how large brokers’ input to the national trade association has impacted NAR’s direction. “I haven’t seen any change that’s significant,” Jenny said, though he acknowledged that he has only second-hand information about the advisory group.
Jenny pointed out a few major areas of contention between large brokers and the national trade group, including the issue of banks in real estate and the fact that even the largest real estate companies have only one vote on the association’s board of directors rather than a weighted vote based on the size of a company’s sales force. On the banks issue, some large brokers favor the entry of banks in the real estate brokerage business, while NAR meanwhile has made it a top legislative priority to fight to keep banks out.
Larry Knapp, president of Alain Pinel Realtors and a member of the advisory group, lobbied the Realtor association back in the late 1980s to provide greater representation for large companies. He encouraged the trade group “to find a way to include and incorporate people from the big companies,” he said. Before the formation of the advisory group, large brokers had a scarce presence within the national Realtor group hierarchy, Knapp said.
“There was a time at NAR when the people running it were small brokers, year after year. Small brokers and big brokers are both very good people, but they have different perspectives, different ways of looking at things. In my opinion, there has been a big improvement in the relationships between big brokers in (the association).”
The advisory group “got off to a little bit of a rough start,” and there was lingering resentment by some of the large brokers, Knapp said. “But I think it has evolved over time to have grown in importance and growing in the ability of large brokers getting an ear from the leadership of NAR. I have a positive attitude about the existence of the group.”
He added, “I think it’s helpful for the leadership of NAR, to the degree that large brokers have a consensus on something, to hear their consensus…I wouldn’t suggest that the large brokers group has a commanding voice there. The fact it has a voice, I believe, has impacted (association leadership.) It has helped them focus on the…issues and even helped focus on what positions to take.”
Typically there is an open discussion on issues at the advisory group’s meetings, with members working to consensus when possible, he said. Among the hot topics at the group’s meetings: updates in the legal fight between the Justice Department and NAR, the association’s ongoing battle to keep banks out of real estate, and other legislative efforts.
Association leaders highlight important topics to include in the advisory group’s agenda, Knapp said, and members also can discuss other issues that are not on the agenda.
The association has maintained a strong grassroots lobbying network for a long time, and Knapp said that the greater participation by large brokers in the association “neither made nor broke that,” adding, “The fact that we are participating now more in that system I think probably strengthens NAR’s position.”
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