The National Association of Realtors (NAR) seeks to raise dues for its 1.3 million members by $30 next year, with additional built-in increases of 2.5 percent per year beginning in 2020.
NAR’s 2019 budget proposal, approved by its budget review and finance committees two weeks ago, calls for a $35.5 million jump in annual spending. NAR says it will devote $17 of the increase to boost its political advocacy spending and the remaining $13 will cover a Realtor-owned transaction management platform for members, building maintenance and renovation, and programs devoted to professionalism, financial wellness, and strategic business innovation.
NAR has dubbed the changes as Strategic Measures Advancing Realtors to Tomorrow (S.M.A.R.T.) Initiatives. The trade group’s dues currently stand at $120, so the requested increase is a 25 percent jump to $150. NAR members must also pay a $35 assessment annually for the trade group’s consumer advertising campaign, which has been approved through 2019 and therefore remains unchanged in this budget proposal.
NAR’s 800-member board of directors will vote on the 2019 budget proposal when it meets on May 19, at the conclusion of the trade group’s midyear conference, the Realtors Legislative Meetings and Trade Expo, in Washington, D.C. The proposal includes a provision that would allow NAR to increase dues by 2.5 percent every year starting in 2020.
In a statement emailed to Inman, NAR Treasurer Tom Riley said the proposed funding increases and initiatives will have “a tremendous impact” on the trade group’s long-term priorities and ambitions.
“The onslaught of new technologies and shifting consumer dynamics demands that NAR invest in and lead the association, its members and our profession into the future,” he said.
“NAR’s leadership recognizes that there is never a good time to implement a membership dues increase; however, for NAR to continue to respond to the increased levels of service and advocacy that our members demand and also provide the support and tools needed to ensure Realtors and our industry thrive, there requires a continued commitment from the entire Realtor family.”
He encouraged all NAR members to educate themselves on the proposed changes.
NAR invited members to share their feedback through NAR’s social media channels, including its closed Facebook group, or to reach out directly to Realtor leaders and staff on NAR’s password-protected community platform, The Hub.
NAR will hold a Facebook Live event on April 5 at 2 p.m. Central (3 p.m. ET/12 p.m. PT) and a webinar in early May to discuss the budget changes.
$20M more for lobbying
A third of current dues go to NAR’s lobbying arm, the Realtor Party. NAR created the Realtor Party six years ago, the last time the trade group raised dues. The NAR board approved a $40 dues hike in 2011 despite polls showing members overwhelmingly opposed it.
The trade group first floated the idea of another possible dues increase at its annual conference in November 2017. At the time, NAR said it was considering increasing its political advocacy spending by $30 million annually, i.e., $25 per member, to fund 33 new or enhanced Realtor Party programs. The budget review and finance committees did not approve all of the programs, so the proposed budget asks for an additional $17 per member for the Realtor Party instead, NAR spokesperson Sara Wiskerchen said via email.
If approved, the new Realtor Party funds would go toward “new/enhanced activities, issues mobilization, state/local independent expenditures, campaign services, RPAC direct fundraising, consumer advocacy outreach, federal public issues advocacy, and federal independent expenditures,” NAR said in an FAQ posted on its website. Three-quarters of the proposed dues increase would go toward local and state political efforts while the remaining 25 percent would go toward federal efforts.
Asked why NAR collects the funds for state and local efforts, Wiskerchen said implementing the funds at the national level “allows for greater efficiencies and for NAR to work with organizations and vendors that extend resources at substantially discounted rates than could be achieved individually in each market.”
“NAR can also centralize processes and collectively manage its staff and resources to achieve program goals more efficiently than associations can do on an ad-hoc basis,” she added. “The tertiary agreement with state and local associations allows for NAR (which is unique) to share and replicate its federal advocacy and programs at the grassroots and state level, so members across the country benefit even more.”
$7.5M more for zipLogix
In November 2015, the NAR board approved a deal to provide its members with transaction management software from tech firm zipLogix at no additional cost to members.
ZipLogix is a joint venture between the National Association of Realtors and California Association of Realtors subsidiary Real Estate Business Services Inc. (REBS). According to zipLogix, REBS owns 57.4 percent of zipLogix and NAR owns 30.2 percent. ZipLogix itself holds 11.6 percent ownership (not owned by any Realtor association or subsidiary) and several other state and local Realtor associations hold the remaining 0.8 percent interest. NAR and zipLogix declined to name the other associations.
Starting in first-quarter 2016, Realtor agents and brokers got free access to the firm’s zipForm Plus software, transaction forms specific to their area, document storage through zipVault, and zipLogix’ transaction management system, zipTMS (formerly known as relay). The deal did not include the broker version of zipForm Plus, zipForm Mobile, zipFormMLSConnect, e-signatures from zipLogix Digital Ink or any other products zipLogix has since launched, such as zipCRM.
Under NAR’s original three-year agreement with zipLogix, the trade group would pay $10 per Realtor per year from its reserves toward the joint-venture for all NAR members — regardless of how many actually used ZipLogix’s products. The deal also tied an increase in the third year to the federal Consumer Price Index, as then-NAR CEO Dale Stinton explained in November 2015. At the time, Stinton said NAR was prepared to fund the zipLogix offering “in perpetuity” from NAR’s reserves.
But over three years, the zipLogix deal has cost more than $38 million, NAR said in a budget information sheet posted on its website last week. That expenditure, plus the $12 million shelled out for real estate data projects Upstream and Advanced Multilist Platform (AMP), have depleted NAR’s reserves by 45 percent. NAR suspended the AMP program in February, resulting in a headcount reduction of 20 at NAR subsidiary Realtors Property Resource (RPR) and about $7 million in savings through 2019.
However, now that the original zipLogix agreement is up for renewal at the end of 2018, NAR is asking its members to cover the cost to avoid depleting its reserves further.
NAR’s Finance Committee expects the cost will be $7.5 million per year. When asked why the annual cost had declined and if that meant the price per member had changed, Wiskerchen said, “We won’t discuss the specifics of contract negotiations. [T]his was the cost the Finance Committee felt best reflected future program costs.” ZipLogix CEO Scott Strong also declined to comment, citing ongoing negotiations.
At the time NAR struck the 2015 deal, about 500,000 Realtors were already using zipLogix’ cloud-based transaction forms software, and NAR expected to add 100,000 more to that figure as a result of the deal. When asked how many had actually been added, Wickerchen said “nearly 100,000” had, which would bring the total number of Realtor users to nearly 600,000.
NAR members who don’t use the zipLogix products they’re paying for won’t be able to opt-out of that portion of the dues increase because “the way that dues are assessed doesn’t allow for members to opt-in or out of certain portions of programming,” Wiskerchen said.
Asked how much the 2019 budget proposal would allocate to RPR, NAR directed that question to RPR. RPR did not respond.
$6M more for buildings
NAR also says it needs $6 million for deferred building maintenance and renovations, including upgrades to the electrical, plumbing and mechanical systems, particularly in its Chicago headquarters on 430 N. Michigan Avenue. The building has housed NAR since 1963 and is also the home of the Chicago Association of Realtors. NAR’s Washington D.C. office is newer, completed in 2004.
The 2019 budget proposal sets aside $8.4 million for office expenses, $6 million for information technology, and $11 million for domestic and international travel for Realtor leaders, staff and thousands of committee members and liaisons involved in NAR’s governance, according to Wiskerchen. Office expenses include maintenance, workstations, computers and equipment while information technology includes software, network and infrastructure hardware and security programs, she said.
“[L]ike any business, NAR has overhead costs for material, labor, buildings, equipment, etc. and those costs can only be cut and reduced so much before it puts the organization at risk of not being able to achieve its goals or implement member-centric programming,” Wiskerchen said.
$2M more for professionalism, wellness and innovation
The proposed dues increase would cover three new programs:
- the Commitment to Excellence program, which would cost $800,000 in 2019
- the Financial Wellness program, which would also cost $800,000 in 2019
- the Strategic Business, Innovation and Technology group, which would cost $400,000 in 2019
The NAR board approved the Commitment to Excellence program in concept in 2016, subject to costs. The program will be voluntary and focus on measuring and increasing professionalism. As part of the program, NAR will invite Realtors to complete a skills assessment measuring their proficiency in areas such as ethics, advocacy, technology, data privacy and customer service. The program then generates individualized recommendations for activities and tools Realtors can use to boost their knowledge and skill.
“These recommendations are aimed to benefit a Realtor’s business and to enhance client relationships, while also rewarding a Realtor’s voluntary commitment to improving themselves and the industry. The program tracks a member’s level of proficiency as they progress year after year, creating valuable metrics highlighting increases in professionalism,” Wiskerchen said.
This fall, NAR will launch financial wellness resources, including an online assessment to help Realtors identify their financial strengths and explore ways to increase their financial literacy. NAR subsidiary The Center For Specialized Realtor Education will invest $1.1 million to build the web-based assessment and accompanying content, Wiskerchen said.
“While many of our members have very successful careers, too many are falling short with their retirement and savings goals. NAR aims to develop new education and resources for wealth building, business planning and investing in real estate so that Realtors can take charge of their financial lives,” she said.
According to NAR, the Strategic Business, Innovation and Technology group will:
- Expand NAR’s technology initiatives to create relationships with larger technology companies that may innovate in and around the real estate industry
- Create a strategic think tank of leading business and technology executives
- Host a real estate innovation summit to showcase NAR’s leadership in technology and technology partners
The funding for the group will supplement efforts to improve the management of real estate data by focusing on three main areas: consolidation and collaboration (data sharing) resources for MLSs, enhanced technology and governance resources, and data and data licensing agreement standards.
The funds devoted to the group and to the Commitment to Excellence program will help Realtors show how essential they are to consumers’ real estate success, according to NAR
“Given the direction our industry is moving, it is also imperative that NAR help its members justify their commission and structures and be seen as more professional for consumers to better understand their value,” Wiskerchen said.
In a blog post, industry consultant Rob Hahn noted NAR’s disproportionate planned spending on building maintenance, office expenses, IT, and travel as compared to the proposed spending on the Commitment to Excellence program.
“[T]he larger question is what your members and interested observers are to make of your stated goal of ‘professionalism’ when you’re spending a fraction of $2 million for it, while spending somewhere in the neighborhood of $18 million on office expenses and travel — and boasting of cutting 1/80th of the travel budget,” he wrote.
In response, NAR’s Wiskerchen said, “NAR like any other business or corporation incurs costs for maintenance, technology and travel, particularly in a member-driven organization, but we are confident that those expenditures are in line with other similar sized and focused organizations.
“Also, the Commitment to Excellence program is being created and rolled out in cooperation with the Center for Specialized Realtors Education, NAR’s education-centric subsidiary, so some of the costs are offset by their support.”
For those interested in NAR’s latest (2016) Form 990, click here.
Realtors interested in NAR’s approved budgets for 2016 and 2017 can find them on NAR’s website in NAR’s Board of Directors meeting minutes as exhibits to the Finance Committee reports, according to Wiskerchen.