NAR: Crisis and Opportunity

Chances are, if you read this blog on a regular basis, you’re already aware of the op/ed by Jim Harrison in Inman News titled “It’s time to stop ignoring the crisis at NAR“. That comes on the heels of a back-and-forth between HAR (still the Houston Association of REALTORS, even if their website stands for Homes And Realtors….) and NAR. Since Jim Harrison and Kenya Burrell-VanWormer are not your average uninformed MINO (Member-In-Name-Only) that constitutes some 85% of the so-called membership, but are the CEO of one of the largest Association-owned MLSs in the country, and the chairwoman of the second (or third?) largest local REALTOR Association in the country, with the RPAC contributions and gold pins to prove their REALTOR bona fides… this isn’t easy to ignore or dismiss as “pot-stirring” (as yours truly knows oh so well.)

And now Brad Inman, one of the most influential people in the industry, has waded in with an op/ed of his own in which he points out some of the abuses he has had to endure for criticizing/questioning NAR and suggests that there is a member revolt at hand without a culture change. Brad has some unusually blunt words of advice:

My advice from the cheap seats: Goldberg should reboot his reform movement. Slow down and carefully review his overall strategy and craft a plan to execute, test some things and do what works.

And here is my tough love: show courage and good faith with your rank-and-file members, and ditch the dues hike. Increasing dues may be the right thing to do, but you have done a sloppy job of communicating the benefits.

In the old world of NAR, getting board approval would be rigged and hailed as a win. Today, at best, it will be a hollow victory and come back to haunt the NAR leadership and further erode its credibility. Something is afoot out there in real estate land, and they had better take notice before it is too late.

Strong words, strong medicine.

Well, with Midyear just around the corner, I have some observations, thoughts and suggestions. They’ll get fairly specific. But for the TL;DR crowd… the overall message is this:

The current leadership team has inherited a bad situation. Trying to slow-play things to avoid shocks has backfired. A shock-and-awe campaign may work better.

Let’s get into it.

NAR Leadership

I won’t pretend to know everyone in NAR Leadership. But I do know quite a few of the individuals. One day, I’ll get to know Bob Goldberg a helluva lot better than I do today, based on a couple of brief exchanges, but people I know and trust (/wave to Greg Robertson) tell me he’s a standup guy in every respect.

Everything I know about those individuals, as well as some of the next-in-line and influential people — like Sherri Meadows and Charlie Oppler, Tracy Kasper, Brian Copeland, Christine Hansen — not to mention dozens and dozens of people who serve on NAR committees and care a great deal about NAR tells me that they have their hearts in the right place.

In fact, I spoke with someone in current Leadership last night, and can relate that they’re puzzled by Jim Harrison’s claim that “relationships between top NAR leadership and its CEO are anything but cordial, compatible or collaborative.” I’m hearing the opposite — that the current Leadership team is unified in a way that is unprecedented in recent NAR history and Bob Goldberg is completely on board. I have no way of knowing, but there’s no reason to question that. Do keep in mind that for the first time, the next three NAR Presidents have announced that they will have a joint platform (the #OwnIt thing that Elizabeth is trying to make stick) over their three years.

I have also heard that the Leadership has investigated some of the issues raised, and as far as they know today, there is absolutely zero impropriety on anything related to SCV, to the DocuSign IPO, and to NARBAC. #LogoGate was a mistake, but they acted quickly to address it. And so on it goes.

I tend to believe them. Doesn’t mean I won’t ask questions, but as I’ve written before, I think this generation of leadership genuinely wants to change and to be relevant, and that they believe the departure of Dale Stinton has brought them the opportunity to do that. Yeah, I went there, as I went there before.

The Crisis

While there are those who deny that a crisis exists, and choose to blame it on manufactured outrage (“clickbait opinion piece” and “#FakeNews” are two things I’ve seen already), I think those folks should remember the lesson of Baghdad Bob. Whatever the cause, there is a crisis at hand, and how NAR and its leaders handle this crisis dictates the course it will take.

When people like Jim Harrison and Kenya Burrell-VanWormer are protesting, it seems bizarre to suggest that the crisis is the result of not being informed or not being involved enough. Those two are among the most informed and most involved people on the planet. One is the CEO of a giant regional REALTOR MLS who deals with REALTOR issues every single day, and has sat on numerous NAR committees. The other is the elected chairwoman of one of the largest local REALTOR Associations in the country, who has volunteered on committee after committee for years — and I happen to know Kenya was deeply involved with TREPAC (Texas RPAC) for years.

If they’re not informed, then who is?

And if a dyed-in-the-wool REALTOR like Kenya, who has actually had to change careers because of her involvement in REALTOR causes, who has raised more money for RPAC than most people reading this, who has proven her bona fides over and over again, is protesting something like the dues increase, just imagine what the average REALTOR is feeling about that issue?

There is a crisis. But it isn’t one of leadership. It’s a crisis of institutional culture on the one hand, and of membership on the other hand.

The Institutional Culture

The line that jumped out at me from Jim Harrison’s op/ed is this one: “Attendees of the Finance Committee meeting called the approach a classic “cram down NAR, love it or leave it, meeting.”

Anybody familiar with NAR’s institutional culture nods along in agreement. I wrote in my Glasnost post:

That other reason, simply put, is that Bob worked for an organization whose institutional culture is rather similar to the old Soviet Union. Loyalty to the Party and to the Great Leader is essential to survival.

In that sort of an environment, you simply did not step out of line or speak your mind or rock the boat in any sort of way. You kept your mouth shut, kept your head down, and did what you were told. And you made sure that you were not the first person to stop clapping.

I have spoken with over a dozen people in a position to know on this very issue over the last few days. I wish I could say more than “they were people in a position to know” but every single person asked me to protect their identity as if they were in the Mafia and talking to the FBI. Yeah, that says “healthy culture” now doesn’t it?

That kind of culture discourages transparency, discourages questions, and most importantly, discourages innovation.

I believed and still believe that Bob Goldberg intends to change that institutional culture. I believe that the current and future Leadership, from Elizabeth to Vince and onward, intend to change that institutional culture.

But this response by NAR to Jim Harrison is not an example of a culture change. It is an unfortunate continuation of the old defensive and dismissive way of doing things. It sets up Fortress NAR and forces people to pick sides. The NAR Faithful then smacks down the critics, marginalizes them, dismisses them, and possibly threatens them with loss of influence, appointments, and even jobs. (Ask me how I know….) That’s always worked in the past to get people in line, hasn’t it? Except that those people may have gotten in line, but the resentment never went away. In fact, it built up and built up.

A straw can break a camel’s back when there are a million other straws underneath it.

Here’s what that response by NAR simply does not contemplate: What if the rebels don’t get back in line? What then? What if the rebels have their own support networks who line up behind them?

I’ll tell you what then: another one of my Black Swans comes home to roost and the union is dissolved.

Ask yourself this question: Does MLS Listings, and its local Associations, need NAR more than NAR needs MLS Listings and its local Associations?

Last year, when I wrote the Glasnost Comes to NAR piece, I counseled patience:

First of all, I would counsel patience for concrete results. Some people, including Andrew during his 1-on-1, have asked Bob about the “First 100 Days”. That strikes me as the wrong analogy, as it comes from the American Presidency. Gorbachev took three years after becoming the leader of the Soviet Union to introduce glasnost. This reform is going to take some time.

This current crisis forces me to rethink that position. Maybe reform would take time, but time isn’t what NAR has on its side right now. Maybe it’s time for something bolder and riskier. Maybe it’s time to push all the chips into the middle.

Maybe this crisis presents an opportunity to the reform-minded Leadership of today.

Go Shock-and-Awe Instead

So my updated recommendation for NAR Leadership is to throw caution to the wind and go for it. Do not slow-play things anymore. What that means….

Clearly State Your Intentions and Your Goals

Part of the problem, I think, is that the Leadership intends real significant changes for NAR, but they’ve never truly stated what those changes are. They also haven’t stated clearly what their goals are.

In NAR’s response to Jim Harrison, they state: “we are 100% committed to tackling the issues of our industry; we are not afraid to shake things up and do what’s right.” But that’s entirely too vague. What are “issues of our industry”? What things do they intend to shake up?

Suppose, for example, the statement were: “We are 100% committed to tackling the issue of REALTOR professionalism.” That’s far more specific, and in line with so much of what Bob, Elizabeth, and others have said.

They say: “We are here to help our members be more successful and keep them essential to the transaction.” What does that mean? It’s vague and therefore empty of real meaning. Who are “our members”? What does “more successful” mean? (Is it only more money in your pocket? Is it more respect from the public? And so on.) What the heck does it mean to be “essential to the transaction”? (We’ll come back to this statement shortly.)

I hate to knock on Elizabeth, but I have to knock on Elizabeth a bit here. What the hell does “Own It!” mean? In this article, she says:

“ ‘Own It’ is both an attitude and an action,” Mendenhall says. “And professionalism is an attitude, not just a time commitment. Your success is about owning it in your heart.”

That’s a political campaign slogan, complete with music video, not a statement of goals and intentions.

Because I’ve spoken to Elizabeth and others over the years about a variety of topics, I believe that what she and the current Leadership team intend is a wholesale reform of NAR, of what it means to be a REALTOR, of burying old hatchets, and of becoming relevant to the average REALTOR member.

So say so, clearly, with no room for confusion.

For example, imagine if Bob Goldberg simply comes out and states, “I intend to defund RPR as soon as I can.” No confusion there, no room for misinterpretation, no possibility of critics charging that he wants to continue the status quo. Imagine if Elizabeth simply states, “I intend to make the REALTOR brand meaningful to consumers and to professionals, because it isn’t today.” No possibility of misinterpreting that goal.

Ensure that the Goals are Actionable and Achievable by NAR

Obviously, pie-in-the-sky goals are nothing more than campaign rhetoric. “Make America Great Again!” comes to mind as an example. Goals have to be actionable and achievable. What’s more, those goals have to be actionable and achievable by NAR, not by somebody else, or by “inspiring the members to have the right attitude” or some such. They have to be things that NAR can achieve through NAR’s own actions.

For example, “keeping members essential to the transaction” is not actually a goal that is actionable or achievable by NAR. Consumers decide whether a REALTOR — or even a real estate licensee — is or is not essential to the transaction.

REALTOR professionalism, on the other hand, is a goal that is both actionable and achievable by NAR… albeit with sacrifice. Incorporating the voluntary aspirational Commitment to Excellence into the enforceable Code of Ethics, and then actually enforcing it, would be one way that NAR can act on the goal.

Acknowledge the Mistakes of the Past and Stop Repeating Them

The single biggest communication change that Leadership could make today is to acknowledge the mistakes of the past. Does that involve throwing some people under the bus? Yes, yes it does. I’m sorry, but that’s just reality.

You can’t say “The new NAR is open, transparent and proactive” without admitting that the old NAR was not those things. And then, you can’t do something straight out of the playbook of old NAR by getting defensive and beating on a critic.

How different is the world today if NAR’s response to Jim Harrison were, “We understand why you have these concerns, because the Homestore thing really did happen, and NAR does have a history of lack of transparency. But we have nothing to hide, and we’re here to change things. How can we make you and others more comfortable? What would you like to know?”

What I advised the current Leadership Team member to do was something simple indeed: hold a “town hall” style meeting at Midyear next week, with no speeches, no presentations, no scripted anything, get everyone on stage, then hand the microphone to whoever wants to speak or ask questions. Then just be real about everything and answer people as if you’re speaking one-on-one. If you can’t answer a question because of legal restrictions, have Katie Johnson standing by to say, “You can’t answer that.” If you don’t know the answer, just say, “I don’t know, but I’ll find out.” If you can answer it, then just answer it.

Just being open and human with your critics defuses the entire situation.

As a matter of fact, embrace your critics. Because those people at least care enough about NAR to criticize. Invite Kenya and Jim and whoever else to participate, offer suggestions, and alternatives. Maybe they weren’t fully aware of all of the issues — so tell them all of the issues, and see if they reach different conclusions.

After all, you’re running NAR, not the national security apparatus. It’s not as if you’re holding back information from the people that would cause nightmares and panic in the streets, or result in our enemies ambushing our soldiers.

The message that kind of leadership sends is a very different one from the one being sent today. And different in a good way.

Make Institutional Changes Right Away

Finally, the events of the past couple of weeks — from Logogate to the latest response by NAR — convince me that NAR Leadership should propose institutional changes right away, and then deal with the consequences.

Don’t play small ball. Don’t slow-play this. Just go out and make Big Hairy Audacious Proposals to NAR Board and to the membership, and then let them get engaged in real discussions on real issues.

Example? Sure.

Propose a $30 dues increase, together with the automatic annual dues increases. But do that in conjunction with cuts to all programs that aren’t (a) lobbying, or (b) related to Professionalism, then putting all of those savings towards increased advocacy and professionalism initiatives.

The 2019 Proposed Budget, prior to the $30 increase, was $131 million in Program Level Expenses for NAR, $51 million for REALTOR Party, and $45 million for Consumer Advertising. Here are some summary tables (this is from 2017):

With the additional $30 in dues, we’re looking at something more like $145 million for NAR, $67 million for REALTOR Party, and $45 million for Consumer Advertising.

Submitting a budget proposal that shows $100 million for REALTOR Party and $100 million for professionalism, and $45 million for everything else sends a clear message to everybody.

People will protest, and want certain programs restored. Fine. Let that come from them, by way of the Board of Directors or Finance Committee.

As Leadership, you can then say, “We cut $2 million from professionalism to restore $2 million to Association Leadership Development because you wanted us to.”

On Transparency

Once you recognize that most of the complaints have to do with a perceived lack of transparency, the answer is quite simple: Put your whole “Leadership in the Sunshine” into practice.

There are local associations today who post their financials on their websites, so that anybody — a REALTOR member or just a member of the public — can see where they spend their money.

Why not NAR?

If you have nothing to hide, just post everything online.

If there are certain things that cannot be shown to the public, or to average REALTOR members, then say so, but include a way for NAR Directors to access whatever information they want. After all, they’re the people charged with governance of NAR. Give them a password-protected “Directors Only” website where they can view and request whatever document they want to see.

At a minimum, when some uninformed member rails against you about lack of transparency, you can simply post a list of names of NAR Directors from their local area. “Go ask them; they have access to everything we have access to.”

Events? Bob Goldberg should be at every major event in real estate, with no presentation prepared, ever. Instead, he should get on stage with a microphone, introduce himself, and simply say, “I’m here to answer any questions you might have, or take back any suggestions you might have.” Bam. Transparency, accountability, and a CEO who is always ready to listen. Hard for critics to accuse Bob or NAR of being out of touch then.

Finally… On Membership

The last thing for Leadership, its critics, and well, everybody else, to recognize is that NAR doesn’t have a leadership crisis as much as it has a membership crisis.

  • True Fact: 85% of your members do not respond to Calls for Action
  • True Fact: REALTOR brand doesn’t mean anything when 100% of the people in a given market are REALTORS because they have to be in order to access the MLS.
  • True Fact: NAR cannot possibly work to ensure that its members are successful, when there are 1.3 million REALTOR members and 5.5 million home sales annually (11 million transaction sides). 8.4 transaction sides per REALTOR at a median home price of $241K is $50K a year before splits and expenses at a 2.5% commission rate. After splits and expenses? We might be talking about $30K a year, or pretty damn close to being eligible for Medicaid.
  • True Fact: 70% of your members are Members-In-Name-Only (MINOS) who feel compelled to join NAR.

To anyone who feels forced to join an organization, a $1 dues increase is an unwelcome burden. Because they don’t want to have to pay a single dime to you. Because they feel forced to join.

That’s not a member. That’s not a person who will ever be happy with whatever you do.

That’s not someone who will ever provide constructive feedback, or have genuine or honest criticism, or give a shit about any of your lobbying efforts or your professionalism programs. That isn’t someone who gives a damn how transparent you are, because they don’t listen to you anyhow. That’s someone who just wants to burn everything down because you burning down means freedom for them.

Stop trying to hold on to those people! Stop lecturing to them that if they only got more involved, if they only had the right attitude, if they only knew… they never wanted to join in the first place! They’re not members; they’re hostages.

Until NAR deals with this plain fact that nobody seems to want to deal with, we’re going to have the same cycle of complaint followed by response followed by complaint until we have yet another crisis that will have the party faithful lining up to defend Mother NAR, and everyone else screamin’ and yellin’ about some insignificant detail or another (really, a logo?)… because the real issue is that they don’t want to be part of you at all.

Let them go. Set them free. Figure out what’s important to those who remain, and set those goals, and do those things, because the ones who remain are your real members.

Suddenly, we might find there’s no leadership crisis at all. Just people who have the same goals disagreeing on tactics and details. That’s a healthy debate. What we have today is something different.

Wrapping Up

I know so many of the people in Leadership at NAR. They’re good people with good intentions and a vision for the future of NAR and of the industry. I know many of the critics, and they’re good people with good intentions and a vision for the future of NAR and of the industry.

I wish all sides would recognize that — that they’re actually on the same side.

They’re on the same side because they’re all people who give a damn about NAR, about REALTORS, about the REALTOR Movement. But the underlying frustration, the million straws that lay beneath the straw that finally broke the camel’s back, has to do with the 70% who are MINOS and never wanted to be a REALTOR in the first place.

I hope everyone involved remembers all of this as they head to Washington DC to work things out.

And for the current Leadership, who inherited a situation and a culture, I hope they would seize the opportunity that this current crisis presents and act with far more boldness and initiative. Apparently, the membership is ready for real change, real fast. Going slow and steady may not be in the cards anymore. So be it. Time to go all-in then. What do you have to lose?

Carpe diem! Fortuna favet audaci!

-rsh

9 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. If NAR does not change, the industry is going to change them. Zillow is kicking their ass, and they have better name recognition with the public than NAR or Realtor. The Logo, the Realtor title, who gives a shit. I am a professional sales executive that happens to have to have state license to sell property. The Notorious ROB … Keep the pressure on!

    Scott Cramer
    B.S., CRS, GRI, SFR, SRES
    Broker – Realtor
    Professional Sales Executive

  2. Some very direct action items, Rob, that are spot on. Time is always the judge. Things always work out. However, they might not work out in ways that are good for NAR or Realtors. I’m betting on Bob and the leadership team to make some radical changes. Today you have provided them a map to follow that certainly makes sense to me. Time will tell…

  3. Suggesting that the NAR “should throw caution to the wind and go fo it” is hysterical. Not in the sense of what it should actually do, but in the sense that it will never do it. Why? Because that degree of bold action simply does not exist in “the helix of the DNA” of the leadership of the NAR. An organization, that since its inception, has furthered its objective of “having a Realtor in every home” fully lacks the leadership that is needed now by those that are based upon their performance, true productive real estate professionals. Yes, the objectives of these NAR members are dramatically different than those of the NAR. The efforts made to satisfy the needs of the largely non-productive membership of the NAR are well served by the continuance of a “level playing field” in the industry. But that is the issue. All Realtors are not equal and the playing fold should not be artificially made level. This cram down on professional standards that would otherwise be based upon proven performance will continue to divide the industry until the antiquated policies and rules of the organization change And for obvious reasons, that are based in the voice of the 600,000 Realtors that should not be in this business, that type of change will not result from a “yell out your vote in D. C. decision.”

  4. Rob,
    Excuse my naïveté…Help me understand something that I’m sure has a very obvious answer, but I’m just not clear on what it is.

    You say:

    True Fact: REALTOR brand doesn’t mean anything when 100% of the people in a given market are REALTORS because they have to be in order to access the MLS.

    Now, I agree with this. Here’s my question.

    What’s stopping someone from contracting with an MLS technology provider (assuming you could find a provider willing to do it, knowing that it could likely cannibalize the rest of their existing business), investing resources to adjust the data fields to fit the nuances of each market across the US, putting together a set of rules and regulations related to use of this MLS, launching a marketing campaign targeting real estate agents, and selling a National MLS membership to those agents across the country at a cost less than NAR’s dues?

    Based on what National, State, Local dues, and MLS fees cost where I’m at, if someone rounded up 1,000 brokers to decide to forgo being paying members of the associations, and instead invest that money instead in an initiative like this, you’d have a seed fund of $1M to get it going.

    So – clue me in. Has it been done? Has it been tried? There must be a reason it hasn’t been. What am I missing?

    1. Pretty sure a number of people have tried, over time. They have all failed, to date.

      The reason is simple: network effect.

      Once you have network effect, trying to beat that requires so much money, time, and effort that it’s usually better to just buy the company outright.

      Think about Ebay for example. In theory, all you need is a site that does auctions — but when all the buyers go there, because all the sellers are there, and all the sellers go there because all the buyers are there… you see the problem?

      It’s also the reason why NAR can’t do a thing about broker-owned MLSs, like NWMLS or MLS Pin, or FMLS — network effect.

      1. If you wanted to have a Natl MLS that also had a consumer-facing website with it, then you definitely would have to build a marketplace which is an extremely difficult task. When you’re talking about the network effect and marketplaces, you have two sides to the marketplace: listing inventory, and buyers.

        However, what I’m saying is there are no national players that currently own both sides of the market (inventory and buyers). Redfin comes close but onviously their website will display non-redfin listed homes as well so they’re not quite there. Between them, Zillow, and realtor.com, there are definitely clear winners as far as who owns the buyer side of the marketplace. But none entirely own the other side of the marketplace (listing inventory).

        So what’s to stop someone from coming up from the central repository for the listing inventory (a national mls) and syndicating those listings to the three major players who already own the buyer side of the marketplace?

  5. This article was not written or approved by Jim Harrision. This is not the views of MLSListings. It was written by a outside consultant and leaked to Inman News.
    The consultant was given the task of putting together an issues paper for us for NAR next week. He obviously put his own opinions down instead. You will see widespread retractIons soon from Jim. We apologize for the uproar it caused.

  6. ONLY My OPINION: I wish everyone would understand why we don’t have a National MLS. Also, why it’s never going to happen! 600+ MLS around the US and some are so many paying high salaries and control freaks. MLS’s are the Profits of the associations, not the NAR Memberships. But please don’t blame NAR, I’m sorry but if you’re the largest trade organization the everyday consumer should know WHO, WHY, WHAT and HOW. The members should know even more about it to be the ambassadors of the organization.

  7. Eileen –

    “If you wanted to have a Natl MLS”

    There are quite enough data brokers out there that would supply the base data (Property appraiser data, taxes, sales history, parcel maps ect)

    You could have all of that for every parcel of land basically in the U.S. for under 500k (including listing data). It’s all ‘out there’ to be had. (still scratching my head as to why why RPR asked for over $40 million this year to do the same thing basically…)

    ANY tech vendor will work directly with agents and brokers. MLSs do not have a monopoly on tech vendors…. Far from it actually.

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