WASHINGTON — Don’t say they didn’t warn you. The National Association of Realtors this week released a free report detailing 50 threats, risks and challenges the real estate is facing today and will face in the near future.

Many of the 50 items take the industry to task for low-quality agents, poor leadership, cumbersome governance structures, industry infighting and shortsightedness, particularly when it comes to the potential effects of advancing technology.

But don’t expect the report to offer any solutions. That is left up to you, at least for now.

The “DANGER Report” lays out 10 potential dangers impacting five groups: agents, brokers, NAR itself, local and state associations, and multiple listing services.

NAR commissioned the 164-page report from real estate consultant Stefan Swanepoel, who conducted extensive research to put it together, including interviews with 70 notables inside and outside the industry and a survey that garnered nearly 8,000 responses.

“The purpose of commissioning [the report] was that there’s actually a great danger in just hearing yourself talk,” NAR CEO Dale Stinton told attendees at the trade group’s midyear conference Wednesday before the report’s release.

“The DANGER Report is like 50 things that could keep you up at night. It isn’t a strategic plan. It isn’t telling you to do anything. It’s 50 potential black swans. It’s for your strategic planning processes. Digest it and cuss and fuss and decide whether it’s right or wrong.”

The report, whose title stands for “Definitive Analysis of the Negative Game Changers Emerging in Real Estate,” does not necessarily reflect NAR’s viewpoints. There are even items included that Stinton himself disagrees with.

For instance, the report says NAR’s decision-making structure — including its nearly 850-member board of directors — could become a hindrance to adapting for the future.

“I believe in our board of directors,” Stinton said.

“I don’t believe they’ve ever gotten it wrong,” though sometimes they come back and tweak decisions that they’ve made.

Agree or disagree, NAR wants to hear what members think about the 50 threats identified, Stinton said. Over the next year or so NAR’s Strategic Thinking Committee will create a document responding to the report.

The committee hopes the report will inspire dialogue that will help real estate organizations prepare for the future, according to the report.

“It is the strategic interpretation of each danger by leaders and how they decide to respond that provides each organization its unique competitive advantage and sets them apart from their competitors,” the report said.

Each threat is rated as to its probability, timing and potential impact on a 1-5 scale. An impact rating of 5 was considered a “Game Changer.” These three factors were combined into an overall composite score called a “Danger Index.”

Catastrophic events, such as an economic collapse or a global pandemic, were not included in the report.

Here are the top 10 threats facing the industry as measured by Danger Index, along with descriptions from the report:

  1. Masses of marginal agents destroy reputation: The real estate industry is saddled with a large number of part-time, untrained, unethical and/or incompetent agents. This knowledge gap threatens the credibility of the industry.
  2. Regulatory tsunami hits: Regulatory creep and large financial penalties increase compliance costs.
  3. Decision-making structure becomes a hindrance: NAR’s complex governance structure encumbers its ability to adopt the strategies, tactics and policies that are appropriate for the future.
  4. Leaders not in unison with fast-paced world: The inability to recruit, train and engage the skills required to lead associations through transition.
  5. Entry by a new player: The current warlike environment in real estate becomes attractive to a large non-industry company that sees opportunity.
  6. Unclear end result: The MLS movement hasn’t thought through what a post Realtor-owned MLS might look like or how it would operate. [See Upstream.]
  7. Commissions spiral downward: A variety of powerful forces exert significant downward pressure on real estate commissions.
  8. Paper brokerages cause disruption: With no walls and little operating costs, paper brokerages proliferate and become a major force overnight. [See Inman series on paper brokerages flying under the radar.]
  9. The three-tier structure liability: The unique three-tier Realtor Association structure emerges as the trigger of major crippling channel conflicts between national, state and local Realtor associations.
  10. Too many uninformed decisions are taken: Misguided decisions are made by leaders who don’t clearly understand their obligations and responsibilities.

At NAR’s annual conference in November, NAR said it would not impose new standards of entry to join Realtor associations, though it would develop a “Code of Excellence” as a way to raise the bar of professionalism in the industry.

This week, Stinton said the Code of Excellence would be aspirational, not mandatory.

See the entire DANGER report.

Email Andrea V. Brambila.

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