With nearly 1,300 Realtor associations and more than 700 MLSs, much of the U.S. real estate industry is organized under the National Association of Realtors umbrella. Is it time to rethink the model?
- Panelists discussed Realtor membership, the Realtor brand and "raising the bar" in the industry.
Is it time to rethink the model?
Panelists debated that question at the “NAR: Should Real Estate be Reorganized?” session at Inman Connect last Thursday.
What’s good about the current model…
Though she would make NAR more “nimble” in adapting to new ideas and new technology if she could, “I believe the model is still relevant. I don’t think we need to start fresh,” Jennifer Branchini, a manager at Better Homes and Gardens Tri-Valley Realty, told conference attendees.
“I’m a Realtor and have been for a long time. I find it to have been very beneficial.”
Saul Klein, a partner at InternetCrusade and a former association president, agreed, though he acknowledged the organization may need some “tweaks” and “changes.”
…And what isn’t working
But Russ Cofano, recently hired as chief strategy officer and general counsel at eXp World Holdings, disagreed.
“How many people think the bar [in the real estate industry] needs to be raised?” he asked attendees. Most hands in the crowd went up.
“It won’t happen under the current structure.”
Cofano emphasized that as the former CEO of the Missouri Association of Realtors, he thinks the Realtor organization is “great,” but “it could be stronger.”
Even in California, where membership cannot be required, most agents and brokers still belong to Realtor associations because dues billing policies require brokers to be on the hook for agents whether they’re members or not, effectively still forcing membership, Cofano said.
Distinguishing between Realtors and non-Realtors
But the problem with forcing membership is that there is no distinguishing factor between a Realtor and a non-Realtor, he said.
“Everybody’s a Realtor,” Cofano said.
“When consumers hear ‘Get Realtor’ [in NAR’s ad campaign] they hear ‘Get agent,'” he added.
Broker Joseph Rand, one of the panel moderators, agreed that people assume that everybody who has a license is a Realtor.
“I wouldn’t necessarily blame NAR for that. Anymore than you blame Kleenex for becoming synonymous with tissue,” Rand said.
NAR is not a professional association, according to Cofano.
“It’s a trade group that borders on union,” he said. Until something differentiates Realtors from agents, “you will never have your organization be deemed a professional association.”
Rand equated the discussion to “rearranging deck chairs,” however.
“It’s all internal to NAR. It doesn’t mean anything to a consumer,” Rand said.
When the theory is that an agent wearing the Realtor “R” is a professional real estate agent, “what does this mean to the public?”
Realtors need to explain to consumers what the difference is, according to Klein.
“The public doesn’t know the difference between an agent and a broker, but in my presentation I made sure they understood that,” he said, noting he had done the same with designations such as “e-Pro.”
Making it a choice
At the end of the day, when someone enters the business, they should have the choice of whether or not to be Realtor, Cofano said.
“Over time, there will be the people that are and the people that aren’t and if the associations do a good job [of distinguishing themselves] consumers will be able to start to tell the difference,” he said.
That means that consumers will start specifically choosing Realtors at their kitchen table and Realtors will make more money, he added.
If Realtor membership is not required to join the MLS, the industry “becomes the wild wild west,” Branchini said.
“If it does become this voluntary thing, then they’re meeting in the coffee shop and creating their own associations. Is that better?” she said.
“Raising the bar” to get a real estate license has been a discussion in the industry for many years, but there are concerns about antitrust when talking about creating barriers to entry, Klein said.
An audience member asked why the bar can’t be raised in the industry.
“Because NAR owes its obligation to all of its members and only a subset of its members want the bar to be raised,” Cofano said.