(Image taken by AI during Midjourney.)
The Alabama Association of Realtors (AAR) attracted attention last week when it sent a letter to the National Association of Real Estate Agents (NAR) and asked for more flexibility in allowing members to decide which levels of real estate agent associations they would like to join. But many in the industry say Alabama real estate agents aren’t the only ones looking for more choice.
“There are a small but growing number of people who think that the whole fabric of how things have been needs to be challenged and perhaps changed,” says Steve Murray, the co-founder of RealTrends advicesaid a statement. “They wonder if they should have a choice.”
Murray said he has spoken to a growing number of brokers who oppose the current three-tier membership model. They are telling their local and state associations that they will no longer adhere to the long-standing practice of requiring all agents to be NAR or association members if the agent is a broker. In addition, they note that they will no longer collect membership dues from their agents for the associations.
Jason Haber, a real estate agent at Compass and the founder of the American Real Estate Associationsaid he was impressed by the courage it took for AAR to write and submit his letter.
“It’s a very hard thing to do, and I’m sure it wasn’t easy, so a lot of credit for their conviction,” Haber said. “I also think this is an important moment for the industry because these outdated systems that have been in place for generations are now being questioned.”
Like Murray, Haber does not believe AAR is the only association considering such a move.
“It’s hard to be the first and so I think it’s a very brave moment for them, but I don’t think they’ll be the last,” Haber said. “This is how change happens. It takes someone with the courage to speak out and take action, and others will follow suit.”
Membership feedback
According to AAR’s letter, written by CEO Jeremy Walker and President Senia Johnson, the trade group felt compelled to bring the issue to NAR’s attention after members expressed their desire for a variety of membership options in the AAR organization. Member Services Survey 2024which was published in July.
The survey found that while the vast majority of the nearly 1,200 respondents rated AAR and their local associations as “good” or “excellent,” only 49% gave NAR the same rating. Additionally, 45% of respondents rated NAR as “fair” or “poor,” as opposed to 17% for AAR and 15% for their local association.
When asked if they would choose which levels of the brokerage organization they belong to, 57% of respondents said they strongly or somewhat favor having them, while only 15% strongly oppose having options.
If given the choice, 46% said they would still join all three levels, while 33% said they would only join their state and local associations, followed by 13% who would join only of their local association. Only 4% said their only affiliation would be with their state association, while less than 1% said their only affiliation would be with NAR.
The survey also shows that 30% of respondents have considered withdrawing from NAR in the past year, while 25% are somewhat or strongly in favor of their brokerage or franchise withdrawing from the national trade group.
When asked whether they supported their local association or AAR withdrawing from NAR, these shares rose to 37% and 40%, respectively, who somewhat or strongly supported a withdrawal. Additionally, 49% of respondents said they were somewhat or strongly in favor of returning to reciprocal membership with state and local agencies.
“As more members express frustration with an organizational structure that they believe does not work for them or that they do not want to be a part of, these frustrated members are actively seeking alternatives to REALTOR membership,” Walker and Johnson wrote. in their letter.
“If we don’t do something, we could lose these members forever. However, by allowing more flexibility, we may be able to retain them as members at one or more levels of the organization, depending on where they see the most value and choose to belong. We believe that empowering our members with this decision-making capacity will be in the best interests of the organization in the long term.”
Similar views elsewhere
According to an East Coast real estate agent who requested anonymity HousingWire, most agents don’t really understand the value of participating in NAR.
“Agents don’t really benefit from joining NAR,” the broker said. “I think it’s an important political voice, but I don’t know if you necessarily have to make every real estate agent pay and force them to join NAR to have a strong voice in the political arena.”
The broker noted that there are many real estate agents who share the same views as Alabama Realtors, and that much of their frustration with the three-party agreement stems from the fact that NAR covers all housing markets and states the same, potentially ignoring local customs or regulations. .
“I think sometimes they go too far by taking a national position on issues in the rules and regulations that they impose on all members. We are not all the same and I don’t think NAR takes that into account,” said the broker. “They are frustrated with NAR for putting us in the position of suing and then issuing these mandates and not allowing local leaders to decide what is good and right for their local association.”
For Murray, an additional source of frustration comes from the fact that agents and brokers serving multiple or widely distributed communities must belong to multiple, overlapping associations in order to access MLSs and effectively serve their clients.
“They wonder why they have to belong to eight or 10 different broker associations to get access to three or four MLSs,” Murray said. “I know many of those who want this practice to end. NAR will actually have to demonstrate why someone should pay their national dues.”
In an emailed statement, a NAR spokesperson defended the Realtor Organization’s three-tier membership, claiming it “empowers” members and consumers with access to localized resources and services, while also benefiting from a national voice, a unified advocacy platform and a single Code of Ethics.”
The spokesperson also noted that NAR’s annual dues are currently set at $156, while state and local associations set their own dues.
While those working in the industry see AAR’s letter as positive for real estate, said Stephen Brobeck, a senior fellow at the Consumer Federation of America (CFA) does not believe that a mass departure of agents from NAR will be a good thing for consumers.
“If the request reflects Realtors’ desire to escape NAR’s new rules on broker compensation and the Code of Ethics, it poses significant long-term risks of increased litigation and public disapproval. CFA has criticized elements of both the settlement and the code, but we also recognize that they provide some market order and benefit to consumers,” Brobeck wrote in an email.
“We are concerned that without these rules in place, government regulators will not be able to deal with the many agents and brokers inherent in the industry. DANGER report 2015 identified as ‘incompetent’ or ‘dishonest’. We remain hopeful that reformers within NAR will initiate changes that bring real consumer meaning to broker membership. We do not see these changes originating at the state level.”
While it remains unclear whether AAR’s letter will lead to material changes, Haber believes that simply publicizing this issue is a win for the industry.
“This is a shift. We have always accepted the status quo, and I think this is good in the long run. It is good in the name of transparency, choice and responsibility in the industry,” said Haber. “However this goes, I think it will be a net positive for the industry.”
