Real estate associations stifle Realtor innovation – Exposé

AGBeat exposé – embracing innovation

AGBeat has long reported on the need for innovation in the real estate industry, pointing out obstacles at the local, state and national level and reporting on actions of organizations, vendors and even agents themselves that hold the profession back from practicing freely, with one of our most ardent causes being patent trolling. We get letters from real estate agents across the nation that are angry they can’t use a certain e-signature platform, IDX provider or the like, because their association has an existing relationship with a vendor that feeds the association’s revenue stream, blocking agents in their market from use of a competitive product. Is it intentional? No. Does it stifle innovation? Yes.

Today, our focus shifts to the industry’s ability or inability to embrace innovative technologies as told through collective feedback derived from real estate companies, agents, vendors, association executives and a variety of other sources. But first, we must understand the process and how we got here.

A brief history of Associations

Real estate associations were established to represent the collective interests of a group of dues-paying members. At a high level, representing the members’ interests included things like leveraging group buying power for the members, drafting standard forms for use by the members, and governing policies that benefit the members and their customers at large. Over the course of time, some Associations broadened their reach by procuring opportunities that created new revenue streams.

Unfortunately, as the world around us evolved, some of the business models that made sense for associations at one time are now in direct conflict with the best interest of various memberships at large, for example the concept of form use and ownership.

Who owns real estate forms?

Many associations, if asked about form use and ownership, may say something along the lines of, “Our members pay dues. Those dues are used, amongst other things, to fund the creation/maintenance of standard forms for use by the members. So, as a result of being a dues-paying member, you have the right to use our forms. How you use those forms (email, fax, e-Sign, online sharing, online editing, online storage, etc.) is of no concern to us, so long as you are not altering the forms or using them in a way that is inconsistent with their intended use.”

Unfortunately, some say that not all associations are moving forward with their members’ interests in mind.

Proprietary platforms

While this is a national issue happening at associations on many levels, one state association has been brought to our attention that allows one real estate firm to use real estate forms on a proprietary electronic transaction platform while denying another firm permission to use the same forms in a similar way on their own proprietary platform. The problem in the industry is that it is not just forms that are the issue, it is many products and services.

Members point to inconsistent and restrictive policies that limit their ability to innovate by improving their efficiency and offering a better customer service experience for their consumers.

After six months and numerous meetings, the 60 person Board of Directors at this particular state association denied a member request to use forms on a proprietary platform that the member notes has no security or copyright concerns, rather delayed their decision to their December 2011 board meeting so they could “come up with standards that would allow the request and tech research to figure out a way to allow it.”

The member alludes to the delayed decision as holding their company back as they watch their primary competitors innovate using the same type of technology under a different brand. The root of the delay is that like many Associations, this particular state association has an exclusive relationship with a forms vendor, restricting members from using any other vendor for forms management.

The takeaway

Realtors are seeking to set themselves apart in a marketplace and claim a technological advantage as it is beaten into their heads at every real estate conference in America that they must be tech savvy to win business or offer better customer service, but many associations have exclusive vendor relationships which are meant to help agents by offering a discount or offering a vetted option, but are ending up monopolizing various functions of the real estate professional’s job.

If a member wants to use an electronic signature platform that helps their business or a blogging platform or a new voicemail system, their feeling is that associations’ relationships with vendors providing revenue streams should not trump their ability to improve how they serve their own customers, especially if no laws, codes, or copyrights are violated. The associations’ picking of winners and losers is seen as a conflict of interest and the disillusionment of agents is growing louder across the country.

Associations are in a tough position and are called to serve not only Realtor members, but broker members and consumers and many are being pressed to be all things to all people, including the arbiters of technology which can lead to exclusive vendor relationships that impede on an agent’s ability to innovate for their consumers.