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NAR quietly buys building: good investment or bad use of dues?

The National Association of Realtors has used member dues to buy an entire building without explanation as to its use, and members are not reacting favorably.

national association of realtors building

national association of realtors building

Good investment or bad use of dues?

Recently, NAR purchased a building in Chicago as an investment. The building, 437 N. Rush St., a two-story building that borders the west side of the association’s Chicago headquarters off Michigan Avenue, filed for Chapter 11 in December of last year. It was a great buy for $1.45 million –but what NAR members in Chicago want to know is, why was the building purchased?

Doug Hinderer, NAR’s senior vice president, was vague when we asked him what the building would be used for. The building, paid for in all cash (no commissions were involved in the deal), could be knocked down to expand NAR’s existing headquarters, or maintain the building as it is and collect revenue from the building’s tenants, which include the Phil Stefani’s 437 Rush Italian Steakhouse.

I found it surprising that Hinderer and NAR were giving vague answers as to how this building would serve the association’s members, especially when it was just last year that NAR raised its member dues. Agents wanted to know why there was an increase in dues, and with this information about a $1.45 investment purchase, agents’ reactions varied from hopeful to confused to angry:

  • “You failed to mention the current appraised value is over $4,000,000. Sounds like one heck of buy for NAR and members,” Jack Persin, managing broker of Ryan Hill Realty and copresident of MORe, said.
  • “Nice that the membership is the last to know,” Lyn Sims of RE/MAX Suburban, said.
  • “We pay our dues so NAR can invest in real estate? Really? Regardless of whether or not it will turn out to be a good investment, this is not what I want them doing with my dues,” an anonymous comment from a “Kent Black” wrote.

Agents in the dark

Given all the facts, even though the purchase is well below market value, I have to say that I feel for the angry agents here. Members’ hands are tied here – they have to pay dues to stay a member of the association, and if they give up membership, their job as an agent would be a lot harder.

But NAR also isn’t telling them where their dues are going, and while this building could expand its headquarters, it sounds like that’s the least of agents’ goals – they want more help with their business, more conferences and seminars that can teach them how to navigate today’s market, and points of use and interest.

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Maybe NAR can use this building for member education classes, but since NAR seems to be undecided as to how to use this building, we’re not exactly sure what it will be used for. And it might not be used for anything, just a way for the association to make more money. In that case, here’s hoping they don’t need to raise member dues again anytime soon.

NAR seems to have taken an uncaring attitude towards its members about this issue, but the deal is done. I just wish NAR would take a different attitude – it’s clear that with unhappy agents over dues and now using dues for this investment, there could be some upheaval in the future.

Written By

Stephanie Sims is the managing editor of Agent Publishing, which currently has online publications in Chicago, Houston and Miami. With expertise in evaluating housing markets, website content and social media strategy, and reporting information agents want to know about, Stephanie can be found at her desk with coffee that got cold or not eating lunch because she’s busy planning editorial assignments and interviews for the Agent Publishing websites.



  1. Michael Gibbons

    August 15, 2012 at 2:06 pm

    NAR should be on one mission. Doing everything they can to raise the perception and practice of the Realtor porfession to that of Lawyer, Doctor or Accountant. Right now being a realtor is a little like being a waitress…last to be paid and sometimes they get stiffed by buyers and sellers alike. Somehow Realtors have to start getting paid for the countless hours of work they do too often on the “hope: they will get paid…in NC everyone gets paid at the closing table (lawyers, repairs, surveys etc) except the firm/Realtor – that would be a good place to start…

  2. Michael Gibbons

    August 15, 2012 at 2:26 pm

    Not sure how it works in other states but why not have buyers and sellers pay (fee-based) respectively for the professional services of a Realtor? Yes….that means buyers pay and sellers pay – why does that not make sense and simplify so much of this madness?

  3. Brian Hickey

    August 15, 2012 at 3:29 pm

    Buying a potential teardown, or anything for that matter, without any commissions involved – this coming from the top of the industry………..hmmm, seems to be against everything they promote?

  4. J Philip Faranda

    August 15, 2012 at 5:39 pm

    Stephanie’s point about transparency is a strong one. I would concede, however, in NARs defense, that if they transferred $1.45 million from a money market to a municipal bond portfolio it would get zero attention. Dues increase or no, the money was already there, and I am not sure membership has much of a say in how reserves are invested. And the non-brokered aspect of the matter does contain more than a little irony. 😉

  5. norm_fisher

    August 15, 2012 at 10:23 pm

    It’s an absolute outrage that a real estate association would choose to invest some of its money in real estate, especially real estate that’s trading at 36% of appraised value. Idiots! 

  6. GreggDLarson

    August 16, 2012 at 8:02 am

    I can’t believe some these comments.  NAR is financially sound and has millions of dollars in reserves. We all know that. Financial strength is a good thing for a trade association that wants to remain relevant and strong in the future, right?Having the money sit in a money market account making 0.5 – 1.0% versus snapping up a building for less than half its appraised value is called a SMART long-term investment.  Wake up and recognize a good investment when you see it, real estate professionals!  Some people expressed concern about the “vagueness” of what NAR will do with the building?  Have you ever been to Phil Stefani’s 437 Rush Steakhouse?  The place is an institution in Chicago (it’s been there forever), the food is insanely food, its always busy, and I’m sure their rent plus the other tenants in the building provides an EXCELLENT ROI on the $1.45M investment.  If NAR does nothing with the building but collect rent, it’ll be a great investment.  Or wait, maybe the real estate market will be stronger in a few years and NAR will flip the building for its $4M appraised value (or more) and make a few million in profit.  Is that a bad thing? Would it have been better to leave that cash in a money market account making 1% or less?  If you’re upset about the “lack of transparency”, what do you think NAR should have done? Take a member vote on whether this is a good investment of reserve funds by asking a million people with no knowledge of commercial real estate value in Chicago their opinion?  And in the process let every investor on the planet know there’s a smoking deal on this building so NAR could attract more buyers to bid?  i think quietly buying this building was brilliant. If you’ve ever been to the NAR building, it doesn’t take an expert to realize that prime real estate next door to NAR’s HQ on Michigan Avenue is a good long-term investment.  My hat’s off to whoever recognized this opportunity and jumped on it.  

    • rqd

      August 16, 2012 at 11:40 am

       @GreggDLarson All great points, Gregg.  
      Rhetorical question: Assuming this was an insanely great deal, why wouldn’t the Stefani Group (or one of their investors, benefactors, etc.) buy the building?  It’s a single tenant, purpose-built, restaurant building.  I’m guessing they could’ve owned it for far less than current rent and financing an insanely great deal is not a problem for a well run restaurant group with many well-heeled fans.
      As far as it being an institution that’s been there forever, I think that’s a bit of an overstatement as it opened in 2000.
      Still looks like a good deal, though.  I’m sure it will work out well.

      • GreggDLarson

        August 16, 2012 at 12:16 pm

         @rqd Good question – I don’t anything about the Stefani Group’s available cash, but I believe most successful restaurant groups stay out of the real estate business and use their cash and credit lines for expansion, not buying their buildings.  NAR is experienced with restaurant tenants too, just think of the famous Billy Goat cheeseburger, Chicago and DC!

  7. gertiecranker

    August 16, 2012 at 9:44 am

    Every association–Realtor or otherwise–is increasingly aware that dues income simply will not continue to be the sole source of income.  That’s especially true in organizations like NAR, with a certain loss in membership numbers in coming years. Association income must be diversified, and I applaud NAR for investing in what looks like a heck of a good real estate deal.

    • GreggDLarson

      August 16, 2012 at 10:43 am

       @gertiecranker Spot on, Gertie.  well said.

  8. NashvilleBrian

    August 16, 2012 at 11:29 am

    This post really makes me sad.  First, the term “quietly” in the headline.  There was nothing secret about this.  It was all over the director’s meeting, in tweet streams, in leadership meetings, in meetings with general members, the list goes on and on.  
    One of the many information sessions  NAR held on this showed the fully transparent breakdown.  The facts:
    NAR now owns an entire block on Michigan Avenue in Chicago on one of most expensive real estate spaces in America.
    The space has a TRIPLE NET income.  Repeat…a TRIPLE NET income.
    The current rate of the return is 13%.
    NAR paid $1.45M and the real property appraised for $4M two months later.
    NAR tried three times over the past 20+ years to do this, and couldn’t get it. 
    The investment of $1.45M adding a whopping $15M of additional value to the current building.
    I’m with Gregg on this one.  My jaw is dropped right now.  This article should be about the brilliance of the move, and it should’ve been written a year ago!

  9. heatherelias

    August 16, 2012 at 3:18 pm

    Just to make a quick clarification, both parties in the transaction were represented by commercial agents (as was detailed in the May article at Chicago Agent Magazine you linked to within this post).  From that article: “The deal was conducted with Phil Hoffer of GNP Realty representing NAR and Bruce Miller of Jones Lang Lasalle representing the Wrigley Company.GNP normally represents NAR in its real estate dealings, considering it has a long-standing relationship with the association and is the management company in charge of its headquarters.”

    • Brian Hickey

      August 16, 2012 at 6:18 pm

       @heatherelias Thanks for the clarification Heather – make more sense that the Assoc would have agents involved.

    • Brian Hickey

      August 16, 2012 at 6:19 pm

       @heatherelias Thanks for the clarification Heather – it makes sense that the Assoc would have used agents to facilitate the transaction.

    • GreggDLarson

      August 16, 2012 at 11:47 pm

       @heatherelias Heather, thank you for the clarification on the agent representation – do you have any idea why a few vocal people/members  assumed no agent/broker was involved in this transaction?  

      • heatherelias

        August 17, 2012 at 8:52 am

         @GreggDLarson I’m guessing since this post said “no commissions were involved” they assumed there were no agents. But I’m only surmising. 🙂

  10. JimReppond

    August 16, 2012 at 7:14 pm

    Thankfully someone is out there doing reporting of where our dues are going. If you trust the NAR to tell us the truth or use our dues for what they were intended, I can refer you to a REALTOR who has a great deal on some swamp land in Florida.
    Some have praised this move as “a great investment” or “great ROI and profit opportunity”. This is not what I pay dues for! If I wanted to do that I would have invested in a REIT! Please just lower my dues and stop trying to make money from my money!

  11. Oldbroker

    August 20, 2012 at 5:46 pm

    Most members do not follow the news or business of their associations…local, state, or national. I have served as a volunteer leader of my association for over 25 years, as a state director for 20 years, and as a member of many NAR committees and forums (incldung a year as a forum chairperson) and I know this to be the case. Knowledge of what is done at the state and national levels is even more remote and members typically know even less about them, and what they do. And that is a members perogative.
    Also, Realtor associations often buy buildings and excess land for current and future use. I have facilitated planning sessions for over 100 associations over the years and it is not unusual to have a segment of the leadership that believes the association’s money should be invested in real estate and not in CDs.
    Saul Klein

  12. GreggDLarson

    August 20, 2012 at 6:32 pm

    Good point, Saul. Most of the local associations I’ve worked with over the years have done well by purchasing their own land and building, especially in the long run.  This is not new or unusal behavior for an association by any means, which made this article even more peculiar and off target.

  13. Oldbroker

    August 23, 2012 at 1:35 pm

    It always amazes me when people say “not with my dues dollars.”
    Associations have a perpetual existence and our REALTOR associations are where they are today NOT because of the dues paid this year, but because of the dues paid over many years, by many members…and by the many efforts of years of volunteer service, and effective management, under different economic conditions in all types of economic environments.
    Associations must be able to deliver consistent services in good times and in bad times, with a fluctuating membership count.

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