Attorney David Barry recently published a report that he sent to the U.S. Justice Department called, “Nine Pillars of the Citadel,” which accuses the National Association of Realtors of various crimes and calls for the legislation of a national multiple listing service. Clareity Consulting has been considering responding to Barry’s paper, and though we have not thought through every one of his points, there are several for which there are obvious answers.
First, Barry builds a case that “Realty agents sell six homes per year and work about five productive hours per week; their pay is over $50,000 per year – the lowest productivity of any job in America.” Doing the math, we are meant to conclude that Realtors earn an undeserved income of nearly $200 per hour.
The strong real estate market and rising prices indeed have led to increased incomes for some agents, but, according to NAR’s 2005 Member Profile, “the median income of sales associates actually declined about 8 percent to $38,300 from $41,600 in 2002.” Also, “the typical Realtor works 46 hours per week; one in five report a workweek of at least 60 hours.”
Using the 46-hour figure, that’s an average pay of $16.01 per hour, which is not very much for licensed professionals who spend 30 hours a year or more attending continuing education, earning designations such as ePRO, and otherwise maintaining the expertise that enables them to provide professional service and advice to the consumer.
Just for fun, why don’t we take a similar look at trial lawyers? To quote an interesting article I read recently from the Manhattan Institute, “Once upon a time, the average person blanched at lawyer fees that reached upward of $500 an hour at many of the best firms. But those high hourly fees are chump change compared with what Trial Lawyers, Inc., is raking in these days. From tobacco settlements to asbestos class-action suits, the industry now boasts fees that can range as high as an astounding $30,000 an hour, turning some members of Trial Lawyers, Inc., into overnight billionaires and providing the capital to bankroll new lawsuit ventures in new markets.” (“Trial Lawyers, Inc.” is the moniker that the Manhattan Institute has given to the business of trial lawyers.)
Barry shouldn’t be casting stones at Realtors, especially since he’s a trial lawyer that has specialized in MLS class-action litigation in recent years.
Second, regarding Barry’s argument about the Realtor trademark: Barry makes the point that NAR waited for many years after the Realtor term was coined in 1915, specifically waiting until 1947 to begin trade-marking efforts after the term had been in popular use for some time. According to Barry, this makes the trademark invalid and the association’s attempt to trademark it an attempt to commit fraud.
Barry’s chronology of events is indisputable, but not germane to the conclusion. The events in question — the initial coining of the Realtor term and its trademark — occur over two different periods of trademark history. While initial trademark legislation was passed in 1881, only tens of thousands of trademarks were applied for and granted in that early historical period, and these trademarks seem to be tightly focused on products, not services or professions. It was not until the Lanham Act, passed in 1946, that trade-marking became what it is today.
According to the McKinney Engineering Library’s timeline of trademark history, “[The Lanham Act’s] purpose is to eliminate unfair competition in marketing goods and services and to provide the owners of marks protection against confusion of similar marks. It covers such areas as when owners of marks are entitled to federal protection for infringement, types of protections available, and procedures for registering marks. It allows for the registration of service marks.”
The Lanham Act is considered the beginning of the modern trademark period, and the growth of trademarking after the Lanham Act has lead to the registration of more than 1.6 million trademarks.
It seems deceptive to make a case that the Realtor trademark should have been made decades before the Lanham Act while leaving out the historical context.
Third, regarding Barry’s call for a national MLS, it has been discussed, reviewed, and tried in various efforts spearheaded by NAR. These efforts were not continued for a variety of sound technical reasons and business practicalities, including reducing competition at the MLS level (for example Chicago, Atlanta and southern California). Someone who truly understands residential real estate and MLS wouldn’t demand this unreasonable — and possibly unattainable — goal.
The MLS industry clearly understands broker and consumer concerns that arise from MLS overlap in natural marketplaces that could be better served by a single MLS. The industry has been consolidating and forming larger regional MLSs for more than 20 years. Today, in various parts of the country, MSA-wide regionalization has already taken place, is currently in progress, or in the planning stages. In addition, several statewide MLS initiatives are underway. This is evidence that outside legislation or mandates are not needed and that the industry is moving forward itself.
There are also many markets across the country where regionalization or nationalization makes no sense and provides no benefit to the Realtor or the consumer, and in fact, would likely reduce the quality of MLS information available.
Gregg Larson is the president and CEO of Scottsdale, Ariz.-based Clareity Consulting, an information technology consultant to the real estate industry.
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