Above, NAR’s headquarters in Chicago
It cannot have been easy for the National Association of REALTORS® (NAR) to remain relatively quiet while enduring the broadsides of the media for a variety of reasons over the last year or so. Between losing the Burnett trial, scandals and shake-ups in leadership, NAR has been on the defensive non-stop, while its industry reputation and membership numbers have suffered to varying degrees.
Then add the looming specter of a new competing organization, the American Real Estate Association (AREA) being announced recently, with one of its founders claiming NAR members are looking for a new path forward, and there is unquestionably choppy seas for NAR now and going forward. Last October, Coldwell Banker, Century 21 Real Estate, Sotheby’s International Realty and RE/MAX announced they were severing their allegiance to the organization. Portal giant Redfin went as far as requiring agents and brokers to leave NAR “everywhere we can.”
In a video post Jan. 31, interim CEO Nykia Wright commented on NAR’s competition.realtor site that the organization is aware of its detractors, disputes many claims against it, and will succeed going forward.
“The real estate profession has been vilified by certain plaintiffs’ lawyers, sensationalized by a few reporters and misrepresented by people who know little about this business,” she began. “First, the notion that the National Association of REALTORS® controls what real estate professionals get paid is wholly untrue. NAR does not set commissions. It never has, and it never will. Period, end of story. But there are many things NAR actually does to help our members better serve buyers and sellers.”
Shortly after posting the video, it was edited slightly, with the wording about NAR never having set commissions deleted. It became, “NAR does not set commissions. And it never will.” Before 1950, NAR had allegedly employed fee schedules.
Continuing, Wright was unconcerned about AREA, saying that “there’s some talk about a new association. We welcome competition from anyone who can match our impact and deliver the kind of value we bring.”
She then explained the value of agents now and going forward.
“Let me make one thing abundantly clear,” she said. “The internet can be a tool, but it is not a replacement for the essential services agents who are REALTORS® provide. A real estate transaction is not a simple click-and-purchase like buying a plane ticket online. Most Americans choose to use a real estate professional when buying or selling a home, not because they’re required to, but because of the help that one provides in navigating the challenges that are a part of the process of buying or selling a home.
“No amount of scrolling on the internet can replace having a professional by your side during what can be a complex, unfamiliar and lengthy process. We take pride in the work we do and will continue to help sellers walk away having sold at a competitive price. And buyers get the keys to their dream homes. I look forward to continuing the conversation.”
Before Wright’s video was posted, RISMedia requested NAR to provide as much clarity as possible on current positions, legal strategies and how it plans to regain its footing, while also seeking perspectives from industry professionals who have long been aligned with the organization, to gauge their views of NAR’s past and future value.
Adrian Provost, principal broker and president, Realty ONE Group Terminus, Atlanta, Georgia, offered a perspective that typifies what many are thinking regarding NAR’s situation with Burnett and other lawsuit matters, as well as corporate leadership issues. And that is that the organization has in the past and continues now to have a great many benefits and programs of value but has had its reputation tarnished and needs to regain it both within the industry and with the public at large. The New York Times, in particular, has in the past few months published numerous lengthy, critical stories focusing on NAR’s issues and challenges.
“I’ve had numerous positive interactions with the National Association of REALTORS®; however, there have been plenty of instances that raised questions about the organization’s level of competence and the suitability of individuals in key positions,” Provost said. “While I value NAR’s advocacy in our industry, I don’t fully align with some of their actions and the level of bureaucracy involved.
“Looking ahead, an ideal resolution (to NAR’s current issues) should be transparent, fair and in line with legal principles and industry standards, while upholding the professional integrity of the real estate sector. The ongoing trial rightfully sparks discussions within the real estate community about the buyer agent commission, and understandably, this emphasizes the importance of a balanced perspective. While the industry is evolving, the immediate risk to the buyer agent commission appears unlikely. The primary focus should be on cultivating a resilient and ethical real estate environment that benefits both agents and clients.”
In one of several questions RISMedia posed to NAR, which were answered via email, the organization was asked how it plans to counteract the negative portrayal of REALTORS®, and other negative narratives promulgated by the mainstream media in recent months.
“Through an integrated approach across earned, paid, digital and social media, we are working harder than ever to communicate NAR’s pro-consumer, pro-competition values and mission, empower REALTORS® as everyday educators and advocates for their communities, and educate policymakers and policy influencers on the value that NAR members bring to the U.S. economy in the service of the American dream,” a spokesperson responded. “NAR does not exist without its over 1.5 million members who are bound to a strict Code of Ethics to put their clients’ interests first. All NAR members are encouraged to use buyer representation agreements as a means to promote transparency and the value of the services they provide to consumers.”
It was recently reported that NAR has lost 1% of its membership. What, they were asked, is the organization doing to try and maintain or even grow its member numbers going forward?
“We have consistently evolved over the course of our history to meet the demands of an ever-changing real estate landscape,” the organization said. “We will continue to communicate the value of NAR to members. NAR supports members’ small businesses through advocacy efforts as well as by offering learning opportunities and resources, proprietary tech tools, economic research and property data, legal and risk management support, special offers and savings on small business solutions and in-person and virtual networking events.”
Longtime industry professionals told RISMedia that even with the clouds swirling around NAR, they believe the good has far outweighed the bad.
Jeffrey Decatur, a broker associate with RE/MAX Capital in Latham, New York, has 30-plus years of experience in the real estate business. Here’s what he had to say about NAR’s positives and its current standing.
“A lot of REALTORS® belong to NAR, and don’t see the value,” he said. “They think NAR is an association that takes their money through dues. But NAR serves a big purpose to me. I have volunteered and held volunteer appointments at NAR, so I probably have a much different knowledge than the average bear. NAR offers countless benefits if you take advantage of them and know of them. One of the biggest is advocacy every year, every day, on a local, state and national level.
“Then there are educational opportunities, conferences, trade shows, industry publications, business partnerships, health insurance, leadership, community outreach, networking and designations. I have seen the benefits to myself, colleagues, clients, customers and the real estate industry as a whole.”
Decatur expressed that NAR’s loss of membership is as much, or more, a result of the turbulence within the industry as a whole as it is from Burnett and negative media coverage.
“The funny thing about the downsizing is that last year NAR lost a lot of members but it had nothing to do with the lawsuits, or very little,” he said. “The market got tougher. Real estate agents have a failure rate of 90% in the first few years. Typically people get in the business thinking they are going to do 10 minutes of work and make $300,000. That is not how it works in the real world. It’s not nearly as easy as TV makes it look, or as glamorous. Go on a septic inspection with me and you’ll see. When they find out it is hard, they get out. The media sells the sound bite of how the lawsuits are causing a 10% reduction in agents, with more to come. But historically, when the market changes, the number of agents changes with it, plus or minus.”
Nevertheless, Decatur acknowledged that fewer members certainly hurts NAR.
“More agents mean lower dues, better budgets and more tools, and less agents mean higher dues, less tools, and smaller budgets, just like any business,” he said. “When any industry is thriving it is all unicorns and sunshine, but when there is change the unicorns may be put in the stable and there are some rainy days. However, those are usually periods of growth and opportunity.”
NAR was asked if it believes consumer attitudes or perceptions of REALTORS® have been, or will be, significantly affected by the negative press coverage—both of lawsuits and company or individual wrongdoing. The spokesperson provided the following response.
“We know that most Americans turn to real estate agents when buying or selling a home because they provide critical services, information and counsel for what will be the most significant, complex purchase of their lives. In fact, in our most recent Home Buyers and Sellers report, 89% of both buyers and sellers used a real estate agent or broker, up from 86% and 87% last year, respectively.”
NextHome Co-Founder and CEO James Dwiggins told RISMedia that NAR’s insistence on avoiding tackling its issues head-on within the media was a source of frustration to members. He referenced new NAR President Kevin Sears’ initial address to membership, which he felt was too ‘corporate-speak.’
“Just be real. Say we’re screwing up, we know it, and I don’t have all the answers, but I’m going to do everything within my power to find them, and if I don’t have anything to report two weeks from now, I’m going to tell you I don’t have anything to report,” he said. “Transparency. Authenticity. It’s basic leadership skills.
“NAR needs to look inward and do a very big, deep dive on what it wants to be. NAR has an incredibly important role in the industry. People who don’t think that are naive to not understand the amount of advocacy work that NAR does. That is an incredibly important part, not only for the real estate community, but for American homeowners and buyers.”
In a video addressing industry concerns about where NAR is now and what the future may hold, Anthony Lamacchia, CEO and broker/owner of Lamacchia Realty, in Massachusetts and Florida, stressed the importance of maintaining REALTOR® membership despite recent challenges and controversies, arguing that NAR has been instrumental in advocating for REALTORS® and homeowners. He encourages agents to get involved in the organization and invest in the REALTORS® Political Action Committee, which he said is crucial for lobbying efforts.
“I’ve been hearing that some are canceling memberships, and I’ve also heard some companies have bailed on being members,” he said. “That’s crazy. Why bail at a time when we are under attack and our market is in a tough spot? If you’re frustrated with NAR, get involved. I was not involved at all from 2004 when I started in the business until 2010. Then I began advocating for myself and my clients on my own around Washington, D.C., and started making connections at the REALTOR® organization there. I realized that they were working on the same things I was.
“If you want to call yourself a REALTOR®, you need to be a member, keep that in mind. If you’re a licensed real estate agent, that does not make you a REALTOR®. A REALTOR® is next level, and yes, you have to pay a membership fee to do that, a very small one. Then there are the government affairs. When Covid hit, independent contractors and gig workers were able to collect unemployment. The REALTOR® organization made that happen. Then there’s the mortgage interest deduction. Every president we’ve had for the last 25 years, when talking about some sort of tax relief or tax plan, mortgage interest deduction ends up on the table. They say maybe we should decrease that. Our organization fights against that because it wouldn’t be good for private property rights. It wouldn’t be good for existing homeowners.”
Not surprisingly, most everyone has an opinion on the Burnett trial, how NAR defended itself and what may or may not happen with the appeal and future trials. Decatur for one noted that public misconceptions about the residential real estate profession hurt NAR and the other defendants.
“I don’t know that everyone, including those involved in the lawsuit, understand the real estate industry, the function of their licensee or the fact that the way real estate and commissions are done today is based on lawsuits from long ago,” he said. “I got into the business in 1994, and there was change in the air. Back then all agents worked for the seller. All commissions were paid by the seller. Fast forward to today and these lawsuits are potentially changing our industry.
“Do I think there was some nefarious collusion, or antitrust going on? No. Is there confusion, misinformation, miscommunication and misunderstanding? Yes. Ultimately I believe that any discussion or lawsuit that moves my profession forward is a positive. There might be some discomfort at first, but you need to be uncomfortable to grow.”
NAR was asked if it was preparing for more negative news coverage as more lawsuits continue to advance toward trial and/or discovery, as well as how their communication and legal strategies complement each other, or will they do so going forward.
“We remain focused on leading the industry forward and ensuring transparent and competitive marketplaces for American home buyers and sellers,” NAR said. “There is a lot of misinformation about how real estate professionals are compensated, particularly from plaintiffs’ lawyers, who are the ones who actually stand to profit from the cases against the industry. Both in and outside court we will continue to clearly communicate NAR’s pro-consumer and pro-competition values. We’re not going to let others, including plaintiffs’ lawyers, continue to spread misinformation about how real estate agents and brokers are compensated.
“We will continue to address the misinformation being peddled by plaintiffs’ lawyers by clearly articulating the value NAR brings to its members and the consumers they serve. The verdict doesn’t change how agents who are REALTORS® conduct business.”
With the Burnett trial, NAR and other defendants are seeking to have the verdict voided. NAR was asked what legal strategies are being employed to make it happen.
“We have filed motions asking the court to set aside the trial verdict and enter judgment as a matter of law in favor of NAR or, at the very least, order a new trial,” the association said. “These motions are part of the post-trial process and detail NAR’s arguments that the verdict was wrong and defied precedent, logic and the evidence. As detailed in our briefing, we believe we have solid grounds for our continuing objections to the verdict.
“Our primary focus is furthering the business of the association. We are fully engaged on the legal, business and advocacy issues that are top priority to our members and, most importantly, the consumers they serve. Under the new leadership of President Kevin Sears and in partnership with Interim CEO Nykia Wright, NAR’s work to strengthen the organization continues uninterrupted.”