Expanding On My RETSO Speech On the Future of the REALTOR Association

 

I’ve been traveling pretty much nonstop since attending the best event on the real estate conference calendar: RETechSouth (or RETSO for short). As always, Brad Nix, Mike Pennington, and Ben Carter (with an amazing team of people) put on a fantastic event. I did a little debate on syndication with Jay Thompson, leveraging my expensive legal education to argue positions I don’t believe in. And then I gave a little ten minute speech on the future of the REALTOR Association:

I am grateful to my friend Sue Adler for taping the speech, and to the RETSO team for giving me permission to publish video footage of their conference. The audio isn’t the greatest, but considering that Sue filmed this on her iPhone, I think she did a fantastic job. And technology is pretty damn amazing.

What I recommended, essentially, is an echo of this post, entitled, “Ask Not What Your NAR Can Do For You“:

Second, having rediscovered your core mission, start purging. As it is today, only about half of the nation’s real estate brokers and agents belong to the Association and can call themselves REALTORS. And that percentage may be less, since NAR dipped below the 1 million mark recently. Smaller and dedicated beats larger and apathetic every time.

I’d like to expand on this notion a bit.

First, Some Data

The impetus for writing further is that thanks to some friends who pointed me to an invaluable resource, I have some data to play with. The data in question is the response rates fo the Call for Actions that NAR sends out to its membership. You can get the reports from 2008 till 2011 here.

State Avg. Working Email Q1AVG CFA ParticipantsParticipation Rate 2011Participation Rate 2010Participation Rate 2009Participation Rate 2008Participation Rate 2007
Alabama 7,177 7109.8%6.4%12.2%8.0%4.2%
Alaska 816 16820.6%10.4%12.5%11.5%9.7%
Arizona 32,120 2,7248.1%5.5%9.4%7.4%4.3%
Arkansas 5,257 82815.7%12.4%19.3%11.5%8.9%
California 121,916 13,83210.5%4.8%10.6%8.1%5.1%
Colorado 14,559 1,93412.0%6.7%13.8%7.0%5.6%
Connecticut 11,889 1,1839.5%5.7%16.9%7.3%4.6%
Delaware 2,302 47418.9%8.9%14.9%9.3%5.4%
Florida 89,382 7,1057.9%6.0%9.3%6.4%3.5%
Georgia 18,129 2,92816.1%14.3%23.3%11.7%4.8%
Hawaii 6,608 96514.3%7.2%11.6%6.7%4.5%
Idaho 4,332 62314.2%6.9%11.3%8.5%4.3%
Illinois 30,687 4,70815.1%6.5%11.3%6.6%3.4%
Indiana 11,521 9247.9%5.0%9.6%6.2%3.5%
Iowa 4,616 82217.5%8.2%14.5%6.5%3.7%
Kansas 6,062 1,29220.8%11.2%15.0%8.4%5.9%
Kentucky 6,783 1,16216.9%8.7%15.4%6.5%4.3%
Louisiana 8,410 1,06012.6%14.0%10.4%8.5%6.0%
Maine 3,444 54415.7%10.0%15.5%14.0%11.6%
Maryland 16,169 2,62215.6%8.7%17.5%10.5%4.8%
Massachusetts 13,847 2,11314.3%7.7%15.2%8.0%4.7%
Michigan 15,831 1,97812.2%7.5%13.8%9.5%6.0%
Minnesota 13,578 1,67012.6%5.7%11.1%7.6%4.6%
Mississippi 3,916 65017.0%9.5%14.2%8.5%7.0%
Missouri 13,377 2,69519.0%14.9%16.2%7.8%4.6%
Montana 2,602 77328.2%8.0%11.9%7.6%3.5%
Nebraska 3,351 52416.2%7.8%11.9%7.6%3.3%
Nevada 11,240 1,0839.5%9.3%12.9%11.1%6.9%
New Hampsire 3,764 3949.8%6.3%11.6%8.1%5.4%
New Jersey 29,862 3,77311.6%6.6%13.8%7.5%4.7%
New Mexico 4,518 50010.6%6.3%12.5%7.2%4.0%
New York 34,715 3,2829.2%5.2%13.1%5.3%3.2%
North Carolina 23,692 1,9648.0%5.3%14.0%7.3%3.8%
North Dakota 1,141 39836.7%27.5%27.1%11.6%6.7%
Ohio 18,917 1,93610.0%6.2%12.4%7.4%4.3%
Oklahoma 5,147 61512.1%6.7%11.1%7.6%4.4%
Oregon 9,359 1,53215.2%9.7%16.8%8.9%4.7%
Pennsylvania 20,215 3,90317.7%9.5%18.2%11.5%7.1%
Rhode Island 3,260 33810.4%7.1%14.7%7.7%5.2%
South Carolina 11,058 1,37811.9%10.4%13.1%8.4%5.0%
South Dakota 1,275 38230.0%24.7%32.9%12.7%9.0%
Tennessee 13,962 2,07914.3%8.7%14.8%10.8%6.0%
Texas 64,376 7,54211.2%6.8%11.1%7.8%6.0%
Utah 9,045 1,87320.6%6.0%9.4%8.2%4.5%
Vermont 1,526 18811.9%8.2%13.4%9.5%4.8%
Virginia 23,074 2,52811.2%6.2%13.5%7.2%3.6%
Washington 10,265 1,82914.6%9.0%20.9%9.1%5.8%
West Virginia 1,956 24813.0%9.6%13.0%9.6%5.7%
Wisconsin 10,304 1,62715.9%10.2%15.4%6.2%3.2%
Wyoming 1,479 20615.0%9.1%12.2%11.4%3.2%
TOTAL782,83196,60914.6%8.9%14.3%8.6%5.2%

It’s a fascinating table for a variety of reasons.

First of all, NAR reports that in 2011, it had 1,009,940 members. But apparently, in 2011, NAR only had 782,831 working emails. (I left out District of Columbia, Puerto Rico, Guam, and the US Virgin Islands, but adding those in gets the working emails number to 785,550.) Some 22% of NAR’s own members either do not have email, or failed to provide a working email to the Association in which they are a “proud member”.

Second, the overall response rates to the Calls to Action are interesting. In 2007, the average participation rate (where the REALTOR actually does something like sending an email to a Congresscritter, or making a phone call) was a paltry 5.2%. But it appears that the Call to Action program itself was new then. We see a steady year-over-year increase from 2007 to 2009, and then a huge drop in 2010, followed by a surge in 2011.

I’m not sure I understand why 2010 was such an anomaly. Maybe it was the issues themselves.

In 2009, there were two Calls to Action: one in support of the American Recovery and Reinvestment Act of 2009 (aka, “The Stimulus” by Obama), and the second one in support of expanding and extending the First Time Homebuyer Tax Credit. The participation rate for the Stimulus was 8.3%, while the rate for the First Time Homebuyer Tax Credit was 18.2%. Obviously, quite a few REALTORS thought very highly of the $8000 taxpayer subsidy to first time homebuyers in 2009.

But in 2010, there were only three Calls to Action, and two of them had to do with National Flood Insurance and Rural Housing Insurance, garnering 8.5% and 5.2% participation rates, respectively. The other Call to Action, entitled “Prevent New Tax Burdens on Real Estate” drew only 7.8% participation rate.

Then in 2011, we had four Calls to Action:

  1. Tell Congress to Reauthorize the National Flood Insurance Program (9.5%)
  2. Tell Congress: Ensure Your Clients Have Access to Affordable Mortgages (13.5%)
  3. Tell Congress: 20% Down Payments Put the American Dream Out of Reach (10.3%)
  4. Preserve, Protect and Defend the Mortgage Interest Deduction (16.0%)

Three big issues were going on in 2011, and more REALTORS responded. Flood insurance, however, wasn’t getting that many people excited, apparently.

Third, the percentage of Working Emails vs. NAR Membership was way down in 2011. In 2008, the Working Email count was 84% of NAR Membership. In 2009, it was 92%, and in 2010, it was 93%. In 2011, only 78% of REALTORS were providing working emails to NAR. That’s… interesting.

What To Make of This Data?

Different people will interpret the data differently. In my view, the data as a whole says a couple of things fairly clearly.

First, it seems to me that somewhere between 5% and 10% of REALTORS are the truly hardcore political activists, with the average coming in around 8.5%. I’m basing this on the fact that even the Flood Insurance Calls to Action got about 5% of the people to contact Congress while several “indirect” Calls to Action (e.g., the Extend the Stimulus) got about 8.5%.

Second, it also seems that roughly 13-16% of NAR’s members are engaged in political action at all. When a Call to Action to defend the Mortgage Interest Deduction (something that NAR has sworn to “go to the mattresses” to protect) only draws 16% participation, it’s difficult to classify the remaining 84% as people who care much about political matters. (Although, it is possible that there are conservatives and libertarian REALTORS who refused to respond because they believe that the mortgage interest deduction should be eliminated.)

Third, NAR members either don’t care or disagree with NAR more today than they did in previous years. I don’t know how else to interpret the huge drop from 93% of members providing working emails in 2010 to only 78% doing the same a year later. That’s over 200,000 NAR Members who have dropped off the Call to Action rolls.

What To Do About This Data?

The short answer is, “Let them go their way.” It is what I proposed in the speech above, and what I proposed in the prior post.

Consider only those who actually respond to a Call to Action to be a true member of the Association. Depending on the state, that number goes from a low of 7.9% in Florida to a high of 36.7% in North Dakota. (To be fair, Washington DC, the epicenter of the American political world, has an even lower participation rate amongst REALTORS at 6.4%.)  If a “member” does not provide a working email address, she is no true member. Let her go her own way.

And with the remaining 8% or 15% or 30%, immediately call for a meeting of the membership and come to agreement about the issues that the REALTOR Association — local, state, and national — will tackle, and come to at least a majority support of a particular position on those issues. If they are true members, they will find a way to attend, even if it’s over the Internet, and agree to the core mission.

Having defined the core mission, and having restrengthened the commitment of the true membership, figure out a financial plan to keep the organization going in service of that mission… while cutting loose an unthinkably large part of the dues-paying membership. It will mean both austerity in spending and additional dues for the true membership, and it will take some time. But the renewed and re-energized membership will know that the funds go to support the core missions that they themselves have agreed are important, rather than financing a large bureaucracy for the sake of bureaucrats or lavish perks for various peers of the REALTOR realm.

Why Even Think About Such a Drastic Step?

Apart from the ideal of ensuring that only those who truly believe in the REALTOR mission should be part of the Association, and apart from the obvious fiscal discipline such a focused Association would impose on itself, there is a practical element as well.

American politics has become poisonous over the past decade. 2012 promises to be the most divided, most partisan, most bitterly contested election in a generation.

NAR will be forced to support one candidate over another, based solely on its analysis of where that candidate stands on issues important to NAR and its members. Perhaps Romney’s recent ruminations about eliminating the mortgage interest deduction for second homes might tip NAR into supporting Obama in the Presidential race. Or maybe NAR decides that Obama’s call for higher taxes would suppress demand for housing, and will tip towards Romney. And that’s just for the Presidency. Numerous state, local, and Federal positions will be contested in vitriolic terms this year.

REALTORS are human beings, and most of them will end up making a choice on candidates based on something other than real estate policies. I simply cannot imagine that a diehard Code Pink Progressive in San Francisco would find it amusing that his Association is spending his dues dollars running ads for Romney. Vice versa, I can’t imagine a hardcore gun-totin’ Tea Party activist in Alabama being cool with NAR supporting “Nobama” if that’s what happens.

And this divisiveness in our politics will not end in 2012. There are just too many differences of opinion, too much conflict over visions of what America is and should be, and even too much cultural difference between the various sides that I cannot imagine 2014 being some sort of a return to harmonious civil discourse amongst gentlemen. Nor do I think 2016 will usher in the politics of kum-ba-yah.

The 15% or so that are your true members of NAR will be activist enough to stick with the Association through thick and thin. Even should such a member prefer a different candidate than the one chosen by the Association, she is more likely to understand why the Association chose to back one guy over another: because of real estate policies.

That is a united front. It is an Association that harkens back to the original mission of NAR: “effectively exerting a combined influence upon matters affecting real estate interests.” Even if that Association were to be 20% of today’s numbers, it would be one to be feared and respected — even more so because of the focus and the commitment of its members.

Next Up: Using Facebook to Explain Why Leaner and Meaner is Better

I know that conversations are happening throughout the country about the future of the Association, about the future of NAR, about the future of organized real estate. I lay out my case once again for urging a smaller, more focused, more activist organization.

In a future post, I hope to lay out the mechanics of the counterintuitive: getting more powerful and more valuable, by getting smaller. Facebook will be mentioned, yes.

-rsh

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