Last year on this date, I wrote on Inman, “If you have the opportunity to attend the 2019 NAR Tradeshow and Expo, I highly suggest attending next week, because it will never be as influential or significant again.” Oh my, how unfortunately correct was that prognostication?
The first NAR Annual was held in 1908 in Chicago, and after 112 years, the NAR Expo has stopped its in-person expo and meetings. This year, the NAR expo hall will have exactly zero vendors, zero agents and zero sore feet walking around the conference space.
The in-person NAR 2020 Expo would’ve been held in New Orleans this year, and many of us can’t help but think what we would’ve seen and heard there. However, with its new digital format, NAR stretches out more than two weeks, till Nov. 18.
So, was last year the expo’s last dance? Not likely. There is just too much profit to be made, and demand will remain high for in-person events at fun destinations with friends and business partners.
Although it’s too soon to write an obituary, the writing’s on the wall. This is the sunset of an era, and last year was the last great NAR expo.
Besides this year’s pandemic, six major factors are influencing the situation, that if left unchecked and allowed to run their course, will forever alter the size and scope of the conference and its attendance, resulting in the slow demise of a once great trade show event. From my position, I feel there is little that can be done to slow these market forces.
The growth of iBuying
IBuying is a more efficient real estate process than the traditional method. This efficiency currently represents a small segment of the market, but it’s growing at a significant clip year over year.
IBuying also focuses on middle-of-the-road homes (not extremely large or small), which are the easiest homes to market and sell. This automation will reduce the quantity of inventory in the market (by taking away the low hanging fruit), and the remaining inventory will be fought over by those agents who specialize in the edge cases that can’t be automated.
Secondly, in a recent post by Mike DelPrete, he points out that iBuying is eroding commission percentages for buyer’s agents. Thus, in both cases, fewer easy commission dollars available and less lucrative career equal fewer agents.
New opportunities in the mortgage industry
There is a shift — or rather, a slide — going on in the industry that’s beyond the control of agents, teams and brokers as individuals. Brands, however do have a strong say in this fate. Brands are increasingly adopting the “loss leader” approach to running the real estate business. (Loss leader: Selling a service under market value in order to get additional business.) The real estate transaction is the loss leader.
Agents want a larger commission split, and that money comes out of the pockets of brokers and brands. These 100 percent models also now have other benefits like caps, health care and stock — they are flourishing currently. It’s frequently the right move for an individual who knows the business.
But how does a brand stay in business when they make pennies on the dollar for each transaction? They make money on the mortgage, title and ancillary services that surround the transaction.
Advertisers, exhibitors, vendors know this, and we are seeing an increased interest in the other side of the coin as well. Our team has found fantastic opportunities at mortgage events.
Multiple lawsuits currently threaten the very foundation of the majority of real estate brokerages. Last month, a judge denied motions by NAR and other brokerages involved to “dismiss a lawsuit that takes aim at the practice of homesellers paying the buyer’s broker commission,” according to an Inman article published Oct. 5. This lawsuit, for example, would have major implications on the role of the buyer’s agent.
NAR is sacrificing its own
To help save the industry, NAR has implemented a plan that includes planned obsolescence of its numerous MLSs and associations as seen in consolidation efforts. NAR is ritually sacrificing its own.
Why does this matter? Roughly 40 percent of NAR expo attendees attend the event with flights, dinners and hotels paid for by their association. NAR is forcing out (and I agree with the move) people, reducing operational overhead and yet shooting itself in the foot, reducing its own attendance.
Buy low, sell high
As the economy turns south, and we face a serious lack of inventory, there will be a reduction of low-earning agents who decide not to pay their subscriptions and MLS dues to keep their licenses valid, instead opting to invest elsewhere.
This phenomenon reduced more than 400,000 (ballpark) agents in the previous downturn, taking with them an unknown reduced number of Realtor dues, super PAC donations, SAAS investments, hardware and software, etc.
What does the future hold?
Yes, the sun will rise again. With the exception of this year (and perhaps next), the NAR expo is not going away anytime soon. The point here is that the expo runs on vendors’ bank accounts. More vendors equals more revenue for NAR, and optically, more vendors looks better, increasing member attendance. These factors are intertwined.
Revaluate spent a king’s ransom exhibiting in Boston with our NAR stage in 2019, and we were far from the biggest spender. Booth traffic was great, and we had record sales. However, our booth was not supposed to have been on the edge of the hall, yet it was. In the videos from our stage, you can clearly see acres of concrete that are empty behind our booth — NAR didn’t come close to selling out the booth space. And that was pre-COVID-19.
Vendors only spend the money because of the traffic. When traffic drops, the vendors see less value, and fewer vendors will participate, and there is less revenue for NAR. With fewer vendors, the event becomes less valuable to its attendees. As fewer people attend, that reduces revenue for NAR.
However, I’m encouraged as I look to the future. I’m already thinking about NAR Expo 2021. Currently, it’s planned for San Diego, my former hometown. It’s always a fun location, and I look forward to reconnecting with people face to face at that time. But after taking a year off, they will face new challenges in addition to the six other issues that stack the deck against it.
So pay heed my friends. Make a plan to attend digitally this year, and get ready to head to San Diego in 2021. I hope to see you and The Scarf King there.
Editor’s note: A similar version of this article was published on Inman last year.