Midyear Report: First Take on Board of Directors Votes

This post, and this series of reports and opinions from NAR Mid-Year 2011, brought to you by:

The historic meeting of NAR’s Board of Directors is now over. I had the privilege of being able to listen in as a member of the “press” — which the blogosphere and RE.net can actually be. I hope I’m able to do the same at Annual Convention in Anaheim in November.

These are my unorganized thoughts on what happened here today. I wanted to get my impressions out as fast as possible, and compare them to how I might think about the issues with a few days of reflection. If you want my instant reactions from the meeting itself, you can find my tweets from the Board of Directors meeting here (or do a search for #rppsi and #midyear).

The REALTOR Party Political Survival Initiative

The highly anticipated, hotly debated topic of REALTOR Party Political Survival Initiative turned out to be hugely anti-climactic. After days of meetings, forums, conversations, and debates, the actual vote was moved, seconded, and passed so fast that many people — including quite a few Directors — did not realize what had happened.

The vote was that the Board of Directors passed the recommendations of the Executive Committee: to have RPPSI, under Option A, which means a $40 dues increase for the next three years. In fact, the only discussion/amendment was one gentleman who wanted the term “Survival” removed from the name of the initiative. So, we really need to call it #RPPI going forward.

I was shocked, because what I had heard throughout the past couple of days was that the Initiative would be approved, but the issue of funding was very much up in the air. A number of Directors actually said they didn’t realize they were voting on the whole kit and caboodle with that Aye vote. Leaving things in that state of affairs, of course, would have raised real questions of legitimacy for the decision.

Thankfully, a Director moved to reconsider the funding question of RPPI only. That motion was defeated pretty soundly. What that suggests is that the majority of Directors either (a) knew that they were voting on both the Initiative and the dues increase, or (b) would have voted for the dues increase in any event. The result of the initial vote was confirmed, if a bit indirectly.

The response from the Interwebz, at least the RE.Twitter, was instantly hostile and negative. Some of it was just wrong and unfair. I can personally attest to seeing and hearing dozens of conversations, where directors would huddle with each other debating the issue, debating the funding, thinking through the issue as best as they could. To call it a “foregone conclusion” and “backroom deals” and whatnot is simply too cynical, even for me. One is free to disagree, of course, but to ascribe such bad faith to the hundreds of Directors is unfair. If the vote itself went quickly, looked like a rubberstamping act worthy of the Chinese National People’s Congress, it’s because the Directors continuously talked to each other over the entire week about the issue. I’ve heard more than a few stories of Directors changing their minds and changing their votes as a result of all the talk.

Having said that, this vote really revealed a disconnect between perception and reality. I think there’s a perception among the membership, and “out there”, that the NAR Director is like a U.S. congressman — he represents his constituents. Much of the outcry was over the fact that the Directors did not “listen to the members” or “did not represent our views” and so on. The reality is that the NAR Director has a fiduciary responsibility to NAR, and to consider everything in light of, “What is best for NAR?” They are not, strictly speaking, representatives with constituencies.

Whether today’s decision to transform NAR into a political organization (more or less) will have an impact on that distinction between a Rep and a Director remains to be seen.

Something I am curious about is why the opponents of the measure, who obviously feel so strongly about it, did not show up to Mid-Year. They’re all REALTORS, with the right to come and be heard. Why just take potshots from the outside, instead of showing up in person and lobbying for their perspective? Real estate is all about relationships, or so I’ve been told again and again; why would this be any different? Maybe the disconnect between the active Members and passive Members is bigger than I had imagined.

The Franchise IDX Issue

By far the most interesting and most dramatic sequences was the debate over, and the series of votes on, the issue of Franchise IDX. The sequence and consequence are important, so let me explain it as plainly as I could, on little thought. (Yeah, how valuable could that be?)

The Franchise IDX policy passed in November was the official policy of NAR: franchisors had the right to use the IDX listings of any MLS in which one of its franchisees was a member/participant (we’ll be using these terms interchangeably) to put those listings on websites created, owned, and/or operated by the franchisor. There was no requirement to opt in or opt out of this “Franchise IDX”: if your listing was in the IDX, then the franchisors got it.

Protests by Realty Alliance, HomeServices of America, and Leading RE (“RAHL Group” henceforth) led to a raging debate at the MLS Policy Committee meeting on Wednesday. The result of that vote was that the MLS Policy Committee would recommend to the Board of Directors that the “Franchise IDX” rule be suspended until the Annual Convention in Anaheim in November, and that a working group be created to study the issue in depth.

A big part of that decision by the MLS Policy Committee was the advice from Laurie Janik, the General Counsel of NAR, that under parliamentary procedural rules that NAR employs, a “repeal” vote at the Board of Directors would require a 2/3 majority vote, because the Board did not have prior notice that this issue would come before them. But she thought that a “suspend” vote might only require a 50% majority vote. The strong implication, then, is that the MLS Policy Committee was looking to prohibit the practice of franchise IDX indexing immediately, and chose the most efficacious way of doing just that.

The issue that immediately arose was that the franchisors, who had relied on the existing Franchise IDX rule in place, would almost certainly sue. They had spent millions of dollars relying on a rule that was duly considered, studied over 18 months, and passed a scant six months ago. Even the “suspend” motion would have resulted in major losses for the franchisors. So they made their displeasure known in the appropriate places.

The result is that as I reported yesterday, the Executive Committee would vacate the recommendation of the MLS Policy Committee and bring a motion to the floor that would keep the Franchise IDX policy as written in place, but require that the MLS allow a broker to “opt out” of such franchise IDX feed, and create a working group to examine the issue in detail for further action at the Annual Convention.

So the sequence of motions/votes today went:

  • Executive Committee’s recommendation is moved, and defeated. It was explained at this time that the parliamentarian ruled that the motion to suspend is substantively the same as the motion to repeal, and therefore would need 2/3 majority vote in any event. So she ruled it out of order. A motion that is “out of order” cannot be brought to the floor at all.
  • A motion to repeal the Franchise IDX policy is brought from the floor (I think by a Leading RE broker), debated at length, and defeated. This vote required 2/3 majority, and the proponents got 58%, falling short of the supermajority requirement.
  • The Executive Committee’s recommendation was brought back under a reconsideration motion (which Ron Phipps fairly begged to do), and an amendment to that recommendation was made to change “opt out” to “opt in”. Both the amendment and the motion itself — leaving the IDX policy in place and in effect — were passed on majority vote. (I had to go to bathroom during the actual debate, but was told this was what happened.)

Net-net, what it means is that the Franchise IDX rule is in place, but substantially eviscerated of usefulness to the franchisors. The RAHL Group has to be pleased, in the sense that franchisors now have the right to index a bunch of nothing, but can’t be thrilled that their main point of principle — that of preventing access to the MLS to “non-participants” — did not carry the day. All of the anti-trust concerns, all of the “public utility” concerns, etc. are very much still alive. And they have no right to index any IDX whatsoever. So if the RAHL Group were really motivated by maintaining the bright-line separation between participant and non-participant in the MLS, then it has to continue to work towards full repeal.

The franchisors, I imagine, have to be pissed off. I’m not sure that this would stay their hand in filing suit. The millions of dollars they’ve spent is just as useless as if the policy had been repealed. Opt-in process will take time to implement at the MLS level; vendors have to get to work immediately, compliance would need to figure out how to monitor this, etc.  Until that time, can they continue to index IDX listings on their national sites? I’m leaning towards No, given the opt-in provision that took effect immediately.

The immediate consequences are unclear. However, in my mind, there is little question that this issue will be very much alive at Annual. If the reason for the 2/3 majority was lack of prior notice, well, the RAHL Group will make sure that there is all kinds of prior notice for the Board meeting at Annual. The franchisors, knowing that 58% of the Board was willing to repeal the whole thing, should be lobbying and politicking like mad over the next few months. And mulling over what they do about their very expensive, very not-useful investment.

Mass Confusion

One thing I noticed, and verified in conversations with actual Directors, was that there was mass confusion on the franchise IDX issue. Parliamentary rules are partly to blame, since if you don’t have experience with how such things work, it’s all very confusing: speaking FOR a motion might mean speaking AGAINST the substance of what you’re trying to do, etc. Plus, one Director at the end got up and asked for the information to be delivered to them earlier, in more efficacious manner; Ron Phipps agreed to look into improving the process.

The result is that according to people I’ve spoken to, a number of Directors voted the way they did almost solely because of the threat of litigation by the franchisors. A number were not sure exactly what Franchise IDX meant, how it actually works, what the negatives and positives are, etc. They voted for “opt-in” because they knew that it amounted to getting consent of each broker, but more than one Director voted against the initial Executive Committee recommendation (which was ultimately passed on the second try, as amended to include “opt-in”) because they thought it didn’t include a working group (which it did).

Seems to me that training in parliamentary procedure could prove valuable for all NAR Directors, and that any technology-related issue brought before them probably should include a thorough briefing clearly explaining the policy, how it impacts various uses, and how the technology involved actually works.

More Later

As I said, this is just a top-of-mind first impressions post. I have to run to catch a flight, but will revisit this and other issues in the coming days and weeks. Please feel free to comment, ask, and if I got anything wrong, please correct me on any of this stuff.

Your tired scribe,

-rsh

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29 Comments

Join the discussion and state your opinion. Some comments may be held in moderation. I try to get to them as soon as possible, but may be traveling or unable to approve comments immediately. I do not censor comments, but reserve the right to remove anything that looks like spam, trolling, or just outright inappropriate.

  1. Hi Rob.  Only one note.  You questioned the opposition and their lack of being there in DC.  I can speak for several at my local association who had an opportunity to speak to our NAR BOD and voice our opposition a few weeks ago.  Reason I wasn’t there?  I am an active Realtor.  I have buyers and sellers and work to do.  I volunteer my time at the state and local level and getting to DC is a tough thing to do in May when you’re actively selling.  I just felt the term “taking potshots” was a bit unfair as well.  I agree some opponents were more educated on the facts than others but we all pay the same amount of dues so if they oppose it for whatever reason that is their right to do so.    

    1. Fair point Mike. And I meant no disrespect by “potshots” but that’s how the tweets struck me. Poor word choice there. Blame it on 4 hours of sleep and no food 😉

      Robert Hahn
      7DS Associates
      rhahn@7dsassociates.com
      @robhahn
      973.869.9357

      1. No worries.  I didn’t take it as disrespectful.  I have been vocal as a NO vote on RPPSI.  I actually agree with the majority of the initiative but the part I don’t agree with is a dealbreaker.  I’ve been lucky enough to speak with all of my NAR Directors and voice my concerns before they left for DC.  I just read your new update on Midyear and I do see that trend and it disturbs me…the trend of us vs. them.  Well, I volunteer a lot of time and go to my local and state meetings which makes me part of “us” but I am against RPPSI which makes me part of “them”.  I have been turned off by a lot of the rhetoric by those FOR the initiative that the rest of us don’t get it and they know what is best.  Been an internal tug of war for me as I am not anti-NAR in any way shape or form…..doesn’t mean I can’t have an opinion and be against something they propose.   

  2.  Great summary Rob. As a LeadingRE member this is a reasonable outcome for me.

    1. Thanks John. How do you think your leadership thinks about the “non-participant” issue? Is that a dealbreaker for them, or for you? Or was it always about level playing field?

  3. Great post, as usual, Rob.  I thought your suggestion of training directors in parliamentary procedures is an interesting idea which I support. I think it would also be helpful for directors in our state association as well.

    Thanks for all of your posts over the course of the conference.

    1. Robert’s rules can be tough for the masses to grasp. I am by no means an expert however one great resource for anyone is the full Robert’s Rules book or at the very least the Pocket Guide. I carry it to EVERY BOD or MLS meeting.

  4.  Rob, thanks for your quick analysis. I look forward to seeing if you change your perspective after some sleep and home-cooking. I followed most of the live coverage via Twitter this morning (@nashvillebrian:disqus @matthewferra:disqus and @utahepro:disqus ) in addition to you. Fascinating the way the IDX motions unfolded. I was otherwise occupied most of the morning so this analysis (or statement of facts as you lawyers like to say) was helpful in allowing me to identify and sort through the various motions. And, I agree…a full course in Parliamentary procedure would be beneficial for the Directors (even if it were skinny-ed down and held at the convention a day or two before any significant vote. down and held at the convention a day or two before any significant vote.

  5. Nice summary Rob. 

    A couple of points/questions: 

    1) You said, ” I’m leaning towards No, given the opt-in provision that took effect immediately.” According to this from NAR, it doesn’t go into effect for 30 days.
    2) Did the motion to strike “survival” carry? I ask because NAR has publish a couple of things since the vote that are still referring to it as RPPSI, with no mention of striking “survival” from the title of the initiative (see previous link and this one).

    1. Y’know Jay, I bet that end of the vote was exactly when I went on bio break. I should have verified. Thanks. Prob 30 days. Which may or may not be enough time.

      Robert Hahn
      7DS Associates
      rhahn@7dsassociates.com
      @robhahn
      973.869.9357

    2. If I recall correctly the removal of “survival” was a comment rather than a motion. Can’t swear to it, but I think someone came to mic during discussion of one of the RPPSI motions and said “…I’d like to see the word survival removed going forward” but I don’t recall any action or vote on that comment.

      1. I thought it was a motion to have the word stricken, which passed on voice vote. But of course, everyone just ignored it after that too. 🙂 We’ll see when the official wording comes out whether “survival” survives.

  6. Ack. Guess I can’t post links. Here they are (hopefully), doctored slightly in an attempt to publish:

    realtoractioncenterDOTcom/ and
    view.ed4DOTnet/v/A7U62I/T0S45/ZGDKQY/NOFAQ/MAILACTION=6&FORMAT=H

  7. Rob,

    You did such a great job today I am reluctant to disagree. But here goes.

    The fact that the Directors discussed the issue privately does not excuse a failure to discuss the issue at the open meeting. We kept hearing there was a minority view, but it never got voiced at the open meeting. Not only is that silence inexcusable in that the Directors who opposed the dues increase had an obligation to the agents they represent [more on that later] to speak up, the failure to debate the majority tainted the process and left an unnecessary bad taste in the mouths of many.

    Your relating of the relationship between the NAR, its Directors and its dues paying members is very disturbing if accurate. My understanding is that the NAR is  a membership organization of more than a million agents who pay dues. The NAR would not exist but for its members. A fidcuiary duty to the NAR is nothing more than a fiducary duty to its members in my view. The members are the NAR. If the Directors are being told they are to serve the legal entity and its hierarchy and not the membership, then the NAR is more screwed up than even I thought.

    Lastly, why do more people not attend the meetings? I can only speak for myself in this regard. I am not allowed to decide whether I want to be part of NAR. In Maryland, I am coerced in to membership under threat of not being able to sell homes. How can that be, you ask? I must join the local association in order to be able to use the electronic lockbox system mandated by that assoication. No problem there from my point of view. It is a good association and a good lockbox system. However, it goes bad when the local association mandates that I must also pay dues to the NAR in order to be a member locally. Net result: join the NAR or don’t sell homes in our County. I don’t know about you, but I’m not fond of an organization that points an “economic gun” to my head and tells me to take it or leave it. And I don’t tend to be supportive of such organizations. I don’t suspect I’m alone.

    Then problem is with the NAR and its style of doing business.

    Tyler G. Webb
    Associate Broker
    Champion Realty Inc
    Annapolis, MD
    tywebb@recrab.com

     

    1. Thanks Tyler — never worry about disagreeing with me 🙂 I seek and welcome reasoned, non-personal disagremeent. It’s how I learn and grow.

      I think you raise some really interesting points; I hope someone more versed in NAR and its policies, etc. would comment in response. Not being a REALTOR, not ever having sold real estate, I don’t feel I could speak too much on that.

      Only the issue of whether the failure to debate publicly delegitimizes the #RPPSI vote is one I can comment on, because I don’t think it does. Legislative bodies (and NAR BoD functions like a hybrid between a legislature and a corporate board) are not necessarily good venues for registering dissent for the sake of registering dissent. It isn’t a court opinion, where the dissenting opinion might have some persuasive value down the road.

      The Directors who strongly disagree with the decision could always write a post, publish, give interviews, give speeches, etc. etc. to express their opinion after the fact. Because the two votes — the initial passage and the reconsider vote — both showed that the overwhelming majority of the Directors wanted Option A. I think the defeat of the reconsider motion establishes the legitimacy of the decision (which is a different thing than saying it was a good or a bad decision). What the point would be of taking to the floor to denounce Option A in that scenario is a little bit opaque to me.

      Maybe in the coming weeks, we’ll see those dissenting positions published from Directors who felt they didn’t get their chance to air grievances/positions. Maybe some groundswell of opposition would bring a repeal motion to the floor. We saw with Franchise IDX that NAR BoD can repeal past decisions, so I wouldn’t rule that out at some point either.

      -rsh

    2. Rob,

      Question: Do you ever sleep?

      I appreciate your response and understand your not wanting to wander into the weeds of the coerced membership issue.

      I would like to clarify what I think about the #RPPSI vote. I don’t think the vote is delegitimized by the failure to debate the issue openly at the meeting. I do think the failure to have even a minute of discussion is evidence of the tin ear NAR has towards its dues payers. This ties into the coerced membership issue. NAR does not have to care what its dues payer think because those dues payers have to ante up in order to pursue their economic livelihood.

      As one who strongly supports the need to “raise the bar” in the real estate industry, I am concerned about the interlocking relationships between the NAR and the state and local associations.

      Thanks again for your reporting and analysis.

      Tyler

    3. Tyler,

      You can be an MLS only broker.  You cannot be forced to join a local association & NAR as part of MLS membership. 

      There is one loophole.

      If you are under a broker who is a member of NAR, then all licensees under that Broker must join NAR. 

      1. I don’t know how they do it in your neck of the woods, Ted.  But- I can tell ya how it’s done here in Central FL. You can get MLS access and pay local, state and NAR dues for $789/year… or you can choose NOT to be Realtor® and pay $789/year.

        So… I guess that IS a choice!  How this could possibly be defensible in court I have no idea.

  8. First off, you did a great job tweeting and analyzing. Thanks.

    To address your question about why dissenters failed to tarvel to DC: I can only speak for myself, but my experience with NAR and her state and local children is that dissent from the party line as passed down on high is futile.  When the “brain trust” at national or state come up with an idea or proposal something, it is always rubber stamped by the locals, and it is in fact usually unanimously approved. The simple fact (IMO) is that you have a system where local BoD members are almost all unwilling to buck national on anything… ever. And for someone to get “promoted” to NAR director they must be 100% true blue to the party line. Independent thinking is frowned upon, and original thought is clearly optional.  Trust me- #RPPSI was a done deal… because that  was what the “leadership” wanted. These directors want to make friends, not waves.

  9. Now to address your comment that directors should not be perceived as representing membership, but rather as having a fiduciary duty to mother NAR, the monolith.  This is clear to anyone that follows the ongoing tragicomedy that is NAR.  And this is a major source of “our” anger, cynicism and discontent. 

    I am, for all intents and purposes, forced to belong to NAR and pay tribute to these bumblers. They in turn, pass an endless series of shortsighted and damaging “rules” that cost me money and disrupt my business. E.G.- shifting IDX rules and domain name rules that allow 3rd parties to steal the high ground in SEO and web traffic and tie the hands of DUES PAYING members. Then they blow $46 million on a new building for “national” to frolic in. Soon after, they throw $25M down the #RPR drain. 

    They make it abundantly clear that don’t give a rat’s ass what members think about the $40 dues increase. You see, we… the brokers, owners and producers are just grist for the NAR mill. Our money is needed… but our opinions are not.

    Finally- let me address your concern/shock/amusement at the general level of cluelessness regarding parliamentary procedures by directors. This is par for the course. These people are primarily made directors because they are “sweet, or fun, or patriotic, or a great RPAC contributor”.

    I serve as an MLS committee member locally. We have not had a comprehensive, updated set of rules for years. AFAIK, membership has never been presented with a rulebook. When I proposed that we get together a “pocket rulebook” of the 20 most frequently broken rules I was looked at like I was insane.  Many of the “rules” proposed, voted on and approved have never been written down. There is not even a clear consensus on what many of the most basic terms, statuses and data entry fields in our MLS mean.

    1.  Some great insight in your comments. I will say that we have been
      locally working on a major project; which has included defining
      statuses, describing all fields & their proper use. We also
      frequently report to members the most often violated rules, etc.

  10. Glad you changed your flight!  : )Politics aside, this is a real bummer for any innovation in this space.  I was hoping to see the next generation of these sites instead of the “network of broker IDX websites” model that is prevalent in the industry.

    1. Well, the Franchise IDX issue wasn’t going to impact innovation, IMHO, Greg. I think the vote you mean is the earlier MLS Policy Committee vote to refer the so-called “Social Media/RSS IDX” rule back to the workgroup. (http://7dsassociates.com/2011/05/midyear-reports-breaking-news-mls-policy-committee-meetings/ last section)

      That vote deserves more treatment in the future, when the current hub-bub around Franchise IDX and the #RPPI die down a bit.

  11. I was traveling home while the meeting was in session. The IDX Franchise issue was up for vote right as I was taking off. It was a long 1 hour and 45 min flight until I got back to your tweets.

    Thanks so much for your updates (and many others, is well)! Next best thing to being there.

  12.  Thank you Rob.
     
    So much to comment on but I will just pick one topic.    Forget about Directors not knowing Parliamentary Rule, how does a VERY important motion as Franchise IDX get approved by NAR in Nov 2010 and 6 months later you are able to write in your post?:
     
     “A number were not sure exactly what Franchise IDX meant, how it actually works, what the negatives and positives are, etc.”
     
    That’s just the tip of the iceberg as to why NAR is coming underfire.  As a Realtor for 20+ years I can tell you it has always been the impression that members who get involved with the politics of our business, in most cases, are not “fully” active in the industry, they are wanna be politicians who like to travel the country to get their picture taken with “real” politicians.  I know many of them and I believe they are well-meaning and absolutely believe in NAR as a lobby that fights for the rights of homeowners and homeownership.  Unfortunately, it seems as if they are being used as puppets by NAR.
     
    My opinion is that Brokers own the listings, let them do what they want with them.  The consumer is going to determine what direction that goes.  Being a RE/MAX agent who benefits from Franchise IDX I am ALL FOR my listings going out to the WWW in any way, shape or form to get my seller the most exposure possible.  
     
    NAR has overstepped their boundaries on what they govern.  Lastly, the root of this evil is really being fertilized on the local MLS level, I am licensed and doing business in 2 states, 3 different local MLS’s and ALL require me to be a NAR member to do business.  This is why there is no “value proposition” in membership to the NAR.  Very unfortunate indeed.

  13. Great post. I attended the Annual meeting debate at MLS & again at Mid Year. It was apparent to me then & magnified again during Mid Year that there is a distinct lack of knowledge/experience about some emerging techno trends & how they impact existing MLS Policies & how the trends should be addressed. Based on you post it also seems clear that certain BOD members may equally lack such knowledge/experience. I don;t fault them for this, heck things are changing so fast and the acronyms are mind boggling!!! also People often don’t want to admit they don’t know what they are voting on , I think that is just human nature and desire to not seem dumb. I think we need to convince people that it is okay to “seem dumb” and ask questions & make an educated & informed vote on the topic before them. We have a saying in my neck of the woods. RDR “Realtors Don’t Read” so even if you brief them ahead of time they often don’t review it. You will always have the % that reads everything & stays informed. best suggestion I have is for the knowledgeable ones to share their opinions & comment for or against the motion when discussion is open. That way, the conversation may clarify things. On the topic of IDX I actually chuckled to myself when the notion of a opt-in/opt-out was proposed, during MLS I leaned to my AE and said, why don’t they just amend the rule to allow those that oppose it to choose & then let the work group discuss it until Annual, after all the listings belong to the Broker. The problem is I didn’t think of it till after the Forum & the floor was closed to none members during the MLS committee meeting. It was also noticed some… confusion on Robert’s rules during that meeting also. Either way great post & keep the info flowing…

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