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Editorial: open letter to the National Association of Realtors

In this open letter to the National Association of Realtors, one member says many others are frustrated as he is – do you agree or disagree with his assertions?

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A finger on the pulse of real estate

Since our inception, we have been one of the biggest megaphones in the real estate industry, and we publish housing news so consumers and real estate professionals have the freshest data on hand, while simultaneously publishing industry-changing editorials over the years. Many a policy has changed based on our columnists and you (the reader), and we would argue that the industry is better because of how interested people are in making sure it is running as best as it can.

We recently received an open letter to the National Association of Realtors from from Daniel Bates, who is the owner and Broker-in-Charge of MCVL Realty, a boutique brokerage that specializes in real estate sales and rental management in McClellanville and Awendaw, SC. Bates is also the Chairman of the Bulls Bay Chamber of Commerce which also serves this rural niche located between Charleston and Myrtle Beach.

Upon reading, our first inclination is that we disagree with quite a bit of the content, but understand that many people agree with these points. The role of the world’s largest trade group is extremely complex, and while the member benefits (discounts on car rentals and such) mean little to paying members, the NAR’s policy and lobbying efforts, we believe are critical. The D.C. office is filled with extremely hard working unsung heroes whose fingerprints will never be seen as they help guide successful policy and block industry-destructive policies.

Although we agree with certain points made by Bates below, we disagree with others, so instead of us making the decision about whether Bates’ opinion is on point or not, we are publishing it in full and asking you to tell us in the comments what you think – what points do you agree and disagree with Bates on?

The following open letter is in the words of Bates himself.

An Open Letter to the National Association of Realtors

I am witnessing a rising level of discontent among members of the National Association of Realtors (NAR) is palpable through comment threads and forums of the internet. These voices have grown from seemingly few in numbers, written off as outliers, to a majority who are not pleased at the basic level of representation from their trade organization. The common thread of the complaints is that the organization values it’s own existence and money over preservation of the industry, it’s members, and the general public, which whom they serve.

With all this discontent, why do members remain? NAR would have you believe that it is because of the excellent services offered, however the answer is much more simple; it costs more to not be a member than it does to be one. Despite a DOJ ruling banning the organization from tying membership to access to the Multiple Listing Service (MLS) which agents rely on to share information about their listings and offer compensation to other participating brokerages, agents still find themselves having to be a member because of “non-member” dues which exceed the cost of membership and local REALTOR Associations built on top of the maintenance of these local databases. Reports from areas that have successfully severed the tie where vast majorities of brokerages and their agents have abandoned local, state, and national REALTOR Association membership is that all is rosy.

NAR leadership cite a plethora of reasons that the organization provides huge value to it’s members, but each argument they make seems to be flawed and causes dissatisfaction among members

A higher standard of professionalism?

NAR touts it’s Code of Ethics (COE) as the crowning achievement of bringing order to an otherwise chaotic marketplace. Perhaps these initial rules were valuable to have been penned, but can basically be summed up by the Golden Rule. There have also never been numbers produced to back up the argument that a REALTOR acts more ethically than a non-member, in fact, the opposite may be true – markets with high non-member numbers are performing quite well. State licensing commissions already enforce rules which guide the industry and protect the public and would cover the most egregious offenses performed by agents. As far as the agent-to-agent infractions, many believe that karma settles those scores and agents who can’t play well with others don’t make it far in the industry.

Ultimately, enforcement of the COE can be called into question because the complaint process is overbearing and impractical for the “victim” and the punishment is often no more than a slap on the wrist. Violators are not stripped of their membership and the records of what happened often remain private, so there are no lasting repercussions to the offender and no effort to clean up the industry.

A brand that attracts consumers?

Despite the organization’s age and advertising budget, the vast majority of the public is still very much in the dark as to any difference between a real estate agent, broker, or REALTOR. In addition, there is also still a large misunderstanding about what agents do, whom they represent, and how they get paid; all basic tasks that a competent trade organization should have successfully tackled from the beginning. Many members also feel that NAR’s decision to run advertising stating that it was a “A Great Time to Buy Real Estate” the entire way through the plummeting real estate market from 2007-2010 was misleading and did more harm than good to gain the trust of an already woeful public.

A lobbying voice?

One of NAR’s biggest arguments for it’s current existence is their great lobbying ability. They tout any cause that they supported as a victory which would have never happened without their involvement, a fact which is impossible to argue, but quite arguable. Even casual outsiders can see that the wheels of Washington are in fact greased by money, but my biggest argument is that most of their achievements while possibly helping real estate agents, have harmed the country in the long-run.

Tax credits to first-time home buyers was essentially cash for clunkers for the real estate industry; an artificial shot in the arm which helped a struggling economy, but also prevented capitalism from taking hold and allowing the market to seek a natural level. The biggest argument that it’s lobbying efforts are not supported by it’s members, was NAR’s own move to make contributions to their PAC mandatory. NAR also stated that they would not take sides in the national election and then proceeded to hire Hilary Clinton as the headlining speaker for their national convention. PAC donations should always be optional when membership crosses political lines.

Superior Training?

NAR is also quick to cite the many designations offered which ensure that their members are at the top of the profession. While there is no denying the value of education, the quality can always be called into question, but more than that; the motives.

NAR makes hundreds of dollars off of each designation issued to each agent anxious to differentiate themselves from the crowd and add some letters to the end of their name. Not only does is cost money to obtain this training and then apply for the designation, but agents are also charged annually to actually retain the ability to claim the use of the designation. The recurring fees just to claim the right to use a designation are like a college reclaiming a graduate’s diploma unless a contribute to the Alumni fund was made each year.

A consumer gateway?

In a move that can only be described as ludicrous, NAR gave away it’s rights and control of it’s own website, Realtor.com, to a third party (read: for-profit) company, Move, Inc. With a direct feed to the listings of it’s members, Realtor.com was able to boast a quality control that it’s competition did not have, however this fact was squandered while it’s competition (Trulia and Zillow) built better tools and features on a more user-friendly interface while convincing brokerages to volunteer their listings to get better exposure. Realtor.com was quickly bumped to the third on the list for most major real estate keyword searches.

Under Move, Realtor.com charged agents and brokerages to display their contact information and the total number of pictures on their own listings as a way to profit, yet brokerages still found a better ROI investing in Zillow and Trulia advertising. Realtor.com had but one claim to make over Trulia and Zillow, that their data was a clean as the new fallen snow, due to it’s source, and yet NAR leadership voted to allow FSBO builders AND non-member agents to supply their data directly to Realtor.com.

NAR then agreed to supply it’s membership records for a tool which had three times been objected to and shot down by REALTOR members which allows consumers to search for agents in an area, promoting quantity over quality and skewed toward the success of teams over individual performance of agents without regard to their abilities to serve a clients needs.

Value for the money?

NAR’s final argument to justify it’s existence is to state that most members get far more in services (like those cited above) than they pay for dues. While NAR (and state and local) memberships often include free and discounted services which can be used by agents, they also discourage free enterprise.

Contracts are struck with companies and then efforts are made to suppress competitors which would normally compete in the market and cause both companies to improve their products and services or lower their prices. Most will agree that if NAR disappeared tomorrow and they had to pay 10 percent more to rent a car, or purchase the complimentary document software (but have a choice on which one to use), but they were not responsible for paying for lobbying, designation use fees, or bloated leadership purchases including a new a high rise building in Chicago; that they would somehow be able to go on.

In the end, the overall grand scope and duties of the National Association of Realtors seems to have escaped their their mission statement “to help its members become more profitable and successful” and morphed into an organization who’s primary goal is to preserve and enhance it’s own existence.

Lani is the Chief Operating Officer at The American Genius and sister news outlet, The Real Daily, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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10 Comments

10 Comments

  1. Ken Brand

    November 13, 2013 at 9:31 pm

    You make some good points. Hopefully we’ll hear some “as persuasive” counter points. Thanks.

    • Hank Miller

      November 23, 2013 at 1:05 pm

      HA! You’ll be waiting a loooooong time for anything positive to come out of NAR. Follow the money – that’s all they are concerned with. Like all other PACS, fees drive the bus and the bus cares less and less about it’s members as moves along.

  2. Shawn K. Rooker

    November 13, 2013 at 10:04 pm

    I was not aware of so much discontent, however I agree to a certain extent on all points. Some more than others, and based on my experience. Code of Ehtics? Great, but that’s not my value to the consumer. Brand? I will take care of that myself, no need for help there. Training? Designations are not helpful, course materials are. I just finished GRI, good stuff, and I’m glad I don’t have to pay annually. And I don’t care about the letters. The Move.com thing is a few steps back.
    However, it is my assessment that their lobbying strength is top notch. The direction they lobby towards is beyond the scope of my attention span, as I am busy with my profession. I do appreciate the work they do in Washington.

    In the end, I am a member because it is my profession. No need for bells and whistles, just forward momentum towards a more professional profession. I do not think the public cares that I am an all-caps-realtor, they only care that I can take the mass amount of information out there and crunch it for them in a highly respectful and consumer-friendly way.

  3. Hank Miller

    November 14, 2013 at 8:12 am

    So a “professional organization” more concerned with their image and perks than their members? Sounds like the Appraisal Institute revisited….how’s that appraisal industry doing under their stellar guidance?

    NAR is concerned with NAR, heard they’re getting a new building?. The suits project an image of concern but please stop already. Bates does a great job highlighting just a few of their flubs – multiple designations by check, lack of professional standards, complete disconnect with the public, subpar agent resources…..and more.

    This industry is a joke in the eyes of the public; there are far too many inept, incompetent and corrupt agents that soil the reputations of those working hard to make everyone understand that this is a profession. If NAR wants to shake it up, how about mandating simple designations based upon PERFORMANCE standards? How about designating a PART-TIME agent level? or a “Trainee” level. How about looking at what appraisers have to do with internships; working to gain experience instead of worthless designations void of real world experience?

    Idiotic commercials, tag lines like “I want to be your realtor for life” and the like continue to undermine the pros in this business. Realtors have horrible public images for a reason, there are no performance standards and no one to answer to.

    Maybe the best thing would be to trash NAR and put some teeth into the state and local boards, clean this industry up and make it the profession we project it as – after all, isn’t all real estate local?

  4. Matt Stigliano - @rerockstar

    November 14, 2013 at 2:58 pm

    Daniel – I’d like to personally thank you for writing what I wish I could have. You’ve neatly tied up many of the loose ends floating through my head since I became licensed in 2008. I’d like to specifically note the section about the COE and how I feel about that. While I believe in the COE and what it stands for, I have never been able to wrap my head around the fact that “real estate agents” (as opposed to REALTORS) may not have a piece of paper stating their ethics, they can certainly abide by these same standards. Of course, the argument is that they don’t have a course to take action against those that violate it. As someone who recently dealt with an ethics complaint (I filed against someone), I agree that the course of action has less teeth than me calling up the agent and calling them out on it myself. Over a year went by before action was taken. The action? A piece of paper telling them they did wrong. That’s it. Certainly not worth the hours of research I poured into making my case or the 100s of pages of copies I had to supply to the the ethics committee.

    As a side note, I’d be curious to see the numbers on how many people actually use the member benefits on things like cars and computers. Personally, I could care less if these items exist or not.

    • Daniel Bates

      November 14, 2013 at 3:33 pm

      Thank You Matt, I became licensed in 2006, so I too have just been sitting back and watching one disgruntle situation after another with increasing frequency. I wrote on another forum and it bears repeating here: I am not opposed to paying dues at all, but when every so called “benefit” is on rocky ground there is a problem and we as members have a right to call out those problems. If those complaints fall on deaf ears and no action is taken than we have a right to leave. I would hope that NAR leadership would not want to see that. I have no doubts that if there is a mass exodus that it would not be long (almost instantaneous) that a new trade group would spring up. One that would take the lessons learned from NAR’s victories and it’s mistakes and better serve it’s members.

  5. Erica Ramus

    November 16, 2013 at 9:57 am

    I am a member of NAR because my MLS membership requires it. However, I do see many benefits of the group. The lobbying in DC is important. Their educational classes are good. I am in their master’s program and the courses are excellent for the most part. The designation training is very good, although I balk at paying $100 or $200/year just to renew those little letters. That said, I agree with many of the points in the letter.

    1. ETHICS — Being a Realtor does NOT make a person more ethical. Sorry but the fact that you need to teach “the golden rule” at all and require a course (yawn) in how to treat consumers and other agents right is pathetic. The “I am a Realtor thus I am ethical” argument does not fly. I have worked with plenty of unethical agents who wear the badge. Filing a complaint is lengthy and discipline light / rare. Frequently it boils down to “he said/she said” and those in charge can discourage filing if it’s not blatant, rock solid provable violation.

    2. DESIGNATIONS — The letters mean nothing to me. The training is priceless. I have earned designations then let the little letters expire at the end of the year, simply to get the education. I could easily spend $1000 every December on renewing the alphabet soup but I won’t. I don’t put them on my business cards but they’re nice on the resume. Consumers don’t care you’re GRI CRS CRB GREEN AHWD. Really? The only ones you’re maybe impressing is other Realtors at the convention when your name tag is overflowing with letters.

    3. CONSUMER IGNORANCE — Consumers equate Realtor = real estate salesperson just like Kleenex = tissue. We all know it’s not true but they don’t and that’s all that matters. I see non Realtor firms in other markets who operate just fine without the (R) behind their names. Consumers see the sign on the house and the listing on T or Z. They don’t say “Oh you’re not a Realtor let me go find one because I want a Realtor to represent me.” Nope. They just want to buy or sell a house. You have a license, right? Good to go.

  6. Mary St. George

    November 18, 2013 at 7:16 pm

    I am so happy this editorial was put together. NAR is very political in nature and in a way holds us hostage for the mls costs. The whole Realtor thing gets my goat. The public does not understand the difference, nor do they have any idea how we get paid, Even though we are independent contractors, we really are not. There is so much and I could go on and on.

  7. John

    January 6, 2014 at 5:36 pm

    The NAR is nothing but a union but a union that DOES NOT adequately represent its dues-paying members. If it did, it would represent the thousands of agents working for next to nothing fees being crammed down their throats by Fannie Mae, Freddie Mac and countless banks that make up rules as they go along. One agent friend told me that after doing work for a local bank including a free BPO with the prospect of getting a REO listing, he was told to list for 30 days only. And the commission to him was 1.75%. That stinks but agents have no representative to go to to file a complaint. The NAR should be standing up to these institutional owners and demanding fair pay. Like low wage employees are taking a stand against Wal Mart and McDonalds demanding a living wage. If you look at the average income of the thousands of average agents out there you’ll find that they earn less than minimum wage for the hours and work they put in every day of the year. I’d be all for a backlash against NAR and a mass withdrawal of membership.

  8. Pingback: An open letter to the new CEO of NAR

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Opinion Editorials

DNA tests are cool, but are they worth it?

(OPINION EDITORIAL) DNA tests are all the rage currently but are they worth potentially having your genetic makeup sold and distributed?

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Over the last few years, DNA testing went mainstream. Companies like Ancestry.com and 23andMe have offered easy access to the insights of your genetics, including potential health risks and family heritage, through simple tests.

However, as a famously ageless actor once suggested in a dinosaur movie, don’t focus too much on if you can do this, without asking if you should do this.

When you look closely, you can find several reasons to wonder if sending your DNA to these companies is a wise choice.

These reasons mostly come down to privacy protection, and while most companies do have privacy policies in place, you will find some surprising loopholes in the fine print. For one, most of the big players don’t give you the option to not have your data sold.

These companies, like 23andMe and Ancestry.com, can always sell your data so long as your data is “anonymized,” thanks to the HIPPA Act of 1996. Anonymization involves separating key identifying features about a person from their medical or biological data.

These companies know that loophole well; Ancestry.com, for example, won’t even give customers an opt-out of having their DNA data sold.

Aside from how disconcerting it is that these companies will exploit this loophole for their gain at your expense, it’s also worth noting that standards for anonymizing data don’t work all that well.

In one incident, reportedly, “one MIT scientists was able to ID the people behind five supposedly anonymous genetic samples randomly selected from a public research database. It took him less than a day.”

There’s also the issue of the places where that data goes when it goes out. That report the MIT story comes from noted that 23andMe has sold data to at least 14 outside pharmaceutical firms.

Additionally, Ancestry.com has a formal data-sharing agreement with a biotech firm. That’s not good for you as the consumer, because you may not know how that firm will handle the data.

Some companies give data away to the public databases for free, but as we saw from the earlier example, those can be easy targets if you wanted to reverse engineer the data back to the person.

It would appear the only safe course of action is to have this data destroyed once your results are in. However, according to US federal regulation for laboratory compliance stipulates that US labs hold raw information for a minimum of 10 years before destruction.

Now, consider all that privacy concern in the context of what happens when your DNA data is compromised. For one, this kind of privacy breach is irreversible.

It’s not as simple as resetting all your passwords or freezing your credit.

If hackers don’t get it, the government certainly can; there’s even an instance of authorities successfully obtaining a warrant for DNA evidence from Ancestry.com in a murder trial.

Even if you’re not the criminal type who would worry about such a thing, the precedent is concerning.

Finally, if these companies are already selling data to entities in the biomedical field, how long until medical and life insurance providers get their hands on it?

I’ll be the first to admit that the slippery slope fallacy is strong here, but there are a few troubling patterns of behavior and incorrect assumptions already in play regarding the handling of your DNA evidence.

The best course of action is to take extra precaution.

Read the fine print carefully, especially what’s in between the lines. As less scrupulous companies look to cash in on the trend, be aware of entities who skimp on privacy details; DNA Explained chronicles a lot of questionable experiences with other testing companies.

Above all, really think about what you’re comfortable with before you send in those cheek swabs or tubes of spit. While the commercials make this look fun, it is a serious choice and should be treated like one.

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Opinion Editorials

How to deal with an abusive boss and keep your job, too

(OPINION EDITORIAL) Sometimes bosses can be the absolute worst, but also, you depend on them. Here’s how to deal with an abusive boss and, hopefully, not get fired.

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Nothing can ruin your work life like an abusive boss or supervisor. But when you’re dependent on your boss for assignments, promotions – heck, your paycheck – how can you respond to supervisor abuse in a way that doesn’t jeopardize your job or invite retaliation?

A new study to be published in the next Academy of Management Journal suggests an intriguing approach to responding to an abusive boss. As you might expect, their study shows that avoiding the abuser does little to change the dynamic.

But the study also found that confronting the abuser was equally ineffective.

Instead, the study suggests that workers in an abusive situation “flip the script” on their bosses, “shifting the balance of power.” But how?

The researchers tracked the relationship between “leader-follower dyads” at a real estate agency and a commercial bank. They found that, without any intervention, abuse tended to persist over time.

However, they also discovered two worker-initiated strategies that “can strategically influence supervisors to stop abuse and even motivate them to mend strained relationships.”

The first strategy is to make your boss more dependent on you. For example, one worker in the study found out that his boss wanted to develop a new analytic procedure.

The worker became an expert on the subject and also educated his fellow co-workers. When the boss realized how important the worker was to the new project, the abuse subsided.

In other words, find out what your boss’s goals are, and then make yourself indispensable.

In the second strategy, workers who were being abused formed coalitions with one another, or with other workers that had better relationships with the boss. The study found that “abusive behavior against isolated targets tends to stop once the supervisor realizes it can trigger opposition from an entire coalition.”

Workplace abuse is not cool, and it shouldn’t really be up to the worker to correct it. At times, the company will need to intervene to curb bad supervisor behavior. However, this study does suggest a few strategies that abused workers can use to try to the tip the balance in their favor.

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Opinion Editorials

Avoid the stack, conquer busy work as it comes

(PRODUCTIVITY) It’s easy overwhelmed with emails and a stack of real mail. But tackling as it comes may help to enhance organization and productivity.

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A few weeks ago, I was walking through my office (also known as my bedroom after 5 p.m.) and I noticed a stack of mail that I had tossed aside over the course of the last few months. While they were non-urgent, this collection of paperwork had been opened, read, and left unattended.

Now, this was a classic move of mine – leave a mess for Future Taylor to clean up. So, imagine my surprise when Present Taylor woke up and decided to put an end to “the stack.”

I sat down, went through everything, and took care of what needed to be done. Even though my wallet took a few hits, it felt great to have this cleared up and off my desk.

Right then and there, I made it a rule to let things only cross my desk once (unless there’s some extenuating circumstance in which it requires me to come back to it; i.e. my favorite sentence on this paperwork “This is not a final bill.”) There’s no point in drawing out the stress that “the stack” induce.

This led me to finally attacking something that’s been on my to-do list since I created my Gmail account in 2009 – create an organizational system.

I set aside some time to create folders (for individual projects, people I communicate with frequently, etc.)

While this is all stuff that you may have already implemented, my point is that this increase my productivity and lifted a weight off of my shoulders I didn’t acknowledge was there.

So, I encourage you to find one of those menial tasks that has been on your to-do list forever and tackle it.

This can include, organizing all of your electronic files into folders, updating your phone and email contacts, or going through all of your desk drawers to get rid of unneeded items. Organizing and freshening up your workspace can help increase your focus.

Once you’re organized and in gear, try the “let it cross your desk once” method. When an email comes in, respond to it or file it. When a bill comes in, pay it. You may be surprised at your rise in productivity.

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