A Question for REALTOR Friends

Earlier today, I posted a request to speak to some of my Facebook friends who are deeply involved with REALTOR Associations, local, state and national. I’m trying to work out something for the future of the Association, post-COVID. Turns out, I have numerous friends who are deeply involved, which isn’t surprising given my career path.

So instead of trying to call each and every single person, I thought I’d set down my questions here and get feedback that way.

This is not a normal Notorious post. It’s more like a longer Facebook survey of sorts. Apologies in advance. But let me set the table.

Political Power is Proven Valuable

First, there is no doubt in my mind that the REALTOR Association has shined throughout this crisis from a political advocacy standpoint.

If you think that real estate was declared an essential business in many of our states because of the goodness of regulators’ hearts and logical reasoning skills of policymakers, I got news for you.

If you think that many of the governmental agencies, such as recording offices, remained open and staffed through the pandemic because governors understand the importance of completing transactions, I got news for you.

It really doesn’t matter whether you like or dislike what NAR, the state REALTOR Associations, and a few local Associations have advocated for. What matters is that they wielded their influence, their political power, to make things easier and better for real estate agents and brokers.

So on the one hand, it seems clear to me that the REALTOR Associations have proven value as political organizations.

Focus on Expenses

On the other hand, just about every broker and agent I have spoken to since the crisis broke have told me over and over again that the biggest shift they have made in business is a renewed and/or brand-new focus on expenses, cash flow, and ROI.

Top team leaders have told me flat out that as soon as the social distancing rules went into effect, they pulled out their budgets and crossed out any expense item that did not produce a very clear, easily seen ROI. Many have cut programs that do produce an ROI, because they needed to make very hard decisions about which checks to write and which checks not to write.

Companies large and small are laying off staff, slashing executive compensation, and furloughing even important personnel because they need to survive the current cash crunch.

This focus on expenses is happening at every level of the industry, from the individual agent to national franchises.

The Two Are Headed For a Collision

In my mind, these two things are headed for a collision sometime next year. For the rest of 2020, I doubt that we’ll see anything happen since most REALTOR Associations have already collected their dues for the year. And its members have already written those checks.

Question is what happens in December of 2020 or January of 2021.

On the one hand, even rank and file REALTORS should recognize that NAR and their state REALTOR Associations might have saved them from an even worse fate. And in some cases, the local Association also put in work with mayor’s offices, city council, and other government entities to protect the real estate business. The value of the Association as a political power is hard to question post COVID.

On the other hand, while the MLS remains invaluable in most of the country, it is very very difficult for any broker or agent to point to real ROI from their Association dues. After all, we have had brokerages in some states seek to become “MLS-only” and skip out on the whole REALTOR deal, because they didn’t see enough value in being a REALTOR.

(And yes, I understand that in many places, the MLS fees and the Association dues are kind of packaged together, but in many places, they are not. And even if they are packaged together, it isn’t that hard for even the average REALTOR to figure out how much of the annual amount is paying for the MLS, how much for the local Association, and how much for the State and National Associations.)

So the question is, how do you think this plays out when 2021 dues come due?

Few Things to Note

As you ponder that question, here are a few things to keep in mind.

One, while most REALTOR members hardly ever think about things like Association/MLS dues except once a year, that was B.C. (Before COVID) when in all seriousness, brokers and agents walked around without knowing what they were spending money on each month. So if your answer is that after we come out of this, brokers and agents will still walk around without thinking about what they’re spending on the MLS and the REALTOR Association dues, at least take the changed mindset into account.

Two, each of these REALTOR members have a say in how things are structured/setup and what they pay. The REALTOR Association is not like the local cable company; the subscriber has a say in how much they have to pay, and for what, because they can vote people into the Board of Directors who make those decisions. So, to use a crude example, if 51% of the membership in a local decide to separate the MLS from the Association, then that can happen, whereas 51% of Comcast customers cannot force Comcast to lower its monthly bill.

Three, while the REALTOR Association has undoubtedly proven its value as a political organization, it is not at all clear that it has proven its value in any other way. If anything, the virtualization of everything has weakened some of the value propositions of the local Association: in-person networking events, in-person live education programs, social events like parties and award banquets, conferences and the like. The Board of Directors at most REALTOR Associations are working brokers and REALTORS, who pay the dues that fund the Association. It seems possible to me that those leaders can do to the Association budget what they have already done to their own budgets: slash everything that is a “nice to have” or does not generate enough ROI/value.

Four, it is possible to be a true blue REALTOR member who is a RPAC Major Donor and still think that the REALTOR Association does a lot of things that add no value. I’ve spoken to more than few such individuals in my career, who would gladly write thousands of dollars worth of checks to support the REALTOR Party but spend not a dime to attend REALTOR Prom.

Fifth, and finally, at least for our purposes, what is interesting about the situation is that the national and state REALTOR Associations have done most of the work during COVID on political advocacy. Frankly, many if not most local Associations don’t even have a GAD (Government Affairs Director)… and even if they did, most of the lockdowns and emergency orders have come from the state’s governor, not local mayors and city councils. On the other hand, a supermajority of the MLSs in North America is owned by the local REALTOR Association (or a group of them for regional MLSs).

So, How Does This Play Out?

That’s the background for my question. I can’t really figure out how things are going to go, so I’m crowdsourcing some wisdom and insight from my friends and readers who are deeply involved in the world of REALTOR Associations.

How do you think things play out in January of 2021 when dues come due? Understanding that nobody really knows anything right now, how do you see things playing out?

Many thanks in advance.

-rsh

PS: No video for this post, because it’s kind of special.

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Rob Hahn

Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

4 thoughts on “A Question for REALTOR Friends”

  1. I think the issue becomes those that have already followed the Notorious in the past. Just kidding, but in jest. We’ve made major changes in the last few years based on the advice of the Notorious at our last strategic planning initiative. We’ve essentially started putting our money where our priorities are as the Notorious came in and said “your are what your budget says you are.” No more outrageous spending on the REALTOR Prom (in fact, we cut it). We put the money in professionalism, advocacy and member support.

    I actually think (and maybe I have to given my position), but when brokers end up cutting expenses, looking more at ROI, they lean on the Association more. When they don’t want to pay that outside counsel or have less admins, they lean on the Association more – (and because as you say they are inevitably linked) the MLS more.

    A downturn is an opportunity for Associations (and by virtue MLSs) to step up and become even more valuable. Look at what good associations are doing now. They pivoted and pivoted quickly. REALTOR Association management at good associations advanced 7 years in 2 weeks. Well structured online meetings; weekly town hall with members; good, quality online education and programming. Maybe it’s the uniqueness of our market, but brokers and agents lean more on the Association in these times, not less – and I have the countless emails from members (who many I had barely heard from before this) thanking and appreciating the work being done to keep them informed.

    While NAR and the state associations primarily do good work on advocacy, many of the initiatives and ideas they advocate for were a suggestion from a local member to the local association – and almost all members only find out the information by the local association providing it to them. Quite simply, communication (and it’s because of the local connection) is where members go for that information.

    • Well, of course, this is rather heartening news to know that one of my clients is well-positioned to thrive in the chaos 🙂 So thanks for that Ryan!

  2. An Association brings everyone together at some level. Regardless of brokerage size, limited services or full services, full time or part time. We are unique because we collaborate with our competitor but only for the benefit of our industry and not to the detriment of our clients or the public. I’m President of a local association and have been volunteering for 12 years. I’m also a top producer, which I share only because I continue to work at a high level and give back. I do agree Associations in general need to step up the game and demonstrate their value. Not all associations are created equal. We are the largest association in our state and we reside in the state capital. We work closely with our state association. Advocacy is a huge value to the organization and a public benefit. We have a GAD and we were very proactive with our cities and counties regarding COVID19. In our area, the local Mayor was responding with more restrictions than the governor.

    Your argument about Realtors and Brokerages watching their budgets and ROI more closely is interesting. Did they do the same during the Great Recession? I honestly don’t know the answer. Although membership was down, I assume it has more to do with the lack of Realtors than a brokerage deciding to go non-Realtor. I don’t ever recall questioning the value of my membership and I’ve always been involved. I do explain the value when I meet with Realtors one on one. Most of the time they just don’t take the time to understand.

    Being a Realtor means I abide by a code of ethics. Maybe that doesn’t mean as much today as it used to, it’s still important to me. I think it’s more important than people realize. Aside from that, people will only get out of the Association (or anything really) what they take the time to understand. Associations service such a variety of needs: Brokers (small and large), teams, individual agents, rural and urban. I believe 150% in the value our association provides to the membership. Sometimes the biggest value are the intangibles, the things you don’t easily see. I hate paying for car insurance but I’m certainly happy to have it when I’ve been involved in an accident. I think there are so many small benefits within the association that you don’t even realize until they are no longer there. I believe Covid-19 has demonstrated the importance of our Associations at all levels and the importance of leadership.

  3. We are expanding to additional states in anticipation of large reduction in association members.

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