Recently, I asked an executive why she wasn’t actively involved with organized real estate — besides contributing to the Realtor Political Action Committee.
With her deadpan tone, she answered, “The same reason Brad Inman isn’t volunteering to save the world from zombies.”
Despite the clout of the billion-dollar real estate trade industry, not enough very successful agents, broker-owners, team leaders and CEOs are actively involved with association activities nor have leadership roles. Even though they pay for it, benefit from it — and can be harmed by its actions.
That’s partly because a myriad of politicized and overlapping volunteer entities make up the association empire, including the National Association of Realtors, state associations, local associations and hundreds of committees.
From the inside, everything can be justified
From the outside, the whole thing looks big, bloated and corrupt — a black box of organizational insanity. Why waste your time? qualified NAR members ask.
Consider the confusing, costly and overlapping sub-groups of NAR such as the CCIM Institute, the Real Estate Business Institute, the Residential Real Estate Council, the Counselors of Real Estate, the Institute of Real Estate Management, the Real Estate Buyer’s Council, the Realtors Land Institute, the Society of Industrial and Office Realtors and the Women’s Council of Realtors.
Volunteer democracy at its best? Hardly. More like the Politburo, the policy-making committee of the Russian communist party.
All of these NAR satellite groups offer plum appointments and represent constituencies for rising leaders. One result is that no one is motivated to reform the structure.
NAR is an opaque network of autonomous fiefdoms
Authority is awarded to those who hang around long enough to move up the leadership ladder and figure out how to work the system.
Qualifications are generally not a consideration for earning a prized post. But time spent working the NAR connected network is rewarded, from sitting on a local board committee to serving the state association to demonstrating loyalty to the granddaddy, NAR.
These volunteer efforts should not be discounted, but they should not represent the typical leadership profile.
Recruiting a very successful agent, team leader or executive to participate in the association morass is like asking them to lay down their ambitions and volunteer to manage customer service calls at Comcast for twenty years. The point: it is a thankless job, unless you are chasing the brass ring.
Lessons from other industries
The old ways of doing association business are under scrutiny in many industries, including lawyers, doctors and gun owners.
The characteristics are often the same: a volunteer system at the bottom with an elite group at the top protecting traditions, power and special benefits. Spending big bucks is central to these enterprises from contributions to politicians, to fancy offices at trophy properties, to lavish travel and entertainment at eye-popping luxury hotels. Big boy world.
The metamorphosis in sports organizations may offer some lessons for real estate. The NFL, the PGA and the world soccer and tennis associations are all being turned on their head.
They share the same characteristics: A big industry, a lack of transparency, constraint-of-trade investigations and leadership scandals. (The headline this past weekend: “Spain’s Top Soccer Official Resigns Over Unwanted World Cup Kiss.”)
Outsiders like private equity firms and Middle Eastern investors are entering the sports arena with plans to blow up the old ways of doing business. It is making the current leadership look woefully out of touch.
Forces bigger than NAR
The DOJ and FTC investigations and the mega-lawsuits may force organized real estate to rethink how it is organized.
And the recent sexual harassment scandal is putting unwelcome pressure on NAR to end its secretive culture and become more transparent. Cracks are showing up in the anachronistic system.
Those who pay the bills are asking WTF. Not crackpots who obsess on criticizing NAR — the anger is rising among hard-working Realtors and important people in the industry. They have been stunned by the recent news rolling out of the Miracle Mile in the upscale neighborhood of Chicago where NAR is based.
A confidential memo to NAR from the law firm that investigated the sexual harassment charges ended with this cringe-worthy prediction:
“Unless you have leaders gossiping, stirring up problems, or allowing others to gossip and stir up problems, this issue should go away quickly for NAR and [for Kenny] Parcell.”
The arrogance is what makes dues-paying members cynical about their trade group. And discourages qualified people from getting involved.
The good news is the current scandal has motivated visionary leaders, outside of the NAR inner circle, who love the industry, are not protectionist and who are eager to reform the organization from top to bottom.
They care and they want their industry group to do better.