Future of Realtor Associations
Russ Cofano on 01 6, 2007
Last week, I did a presentation to the leadership group of a large local Realtor Association and MLS entitled “The Future of the Realtor Association and MLS”. While sitting at the airport waiting for my flight, I read Inman’s blog post regarding the relevance of Realtors. As I contemplated the responses and my recent presentation, maybe as important a question is the relevance, now and in the future, of the Realtor Association to industry practitioners. At the national, state and local level, this organization has had the most impact on how residential real estate is bought and sold. I have been a supporter of Realtor Associations (and their MLSs) which I believe have provided significantly more good to our nation than bad. But this is not a question of good or bad. It is a question of that organization’s ability to continue to work in the face of times that we have never seen before.
For years, the industry has operated in a closed circle that allowed it to control access to listing data and made it very difficult for the average consumer to NOT utilize the services of a Realtor if they wanted access to this very efficient system. This closed circle allowed the Realtor Association and its connected MLS to dictate the “rules of the game” and there was very little ability or reason for industry participants to differentiate.
In addition, the relationship with the consumer was owned by the agent. The broker, for all their importance and public persona, was at the mercy of his top producers for any decision that was not in their best interests could be met with movement to another company. No agents, no revenue.
Lastly, while there were different demographics of consumers, the control of the industry made these generational differences rather dull and insignificant. [photopress:Control_1_1.jpg,thumb,alignleft]
All of this made it rather simple for the Realtor Association and its connected MLS to service their customer who, in reality, was the agent.
Today, the picture is vastly different. The closed circle over listing data is gone. Consumers have it and love it. Underscored by the wave of consumerism and social power that is Web2.0, consumer generational differences have begun to emerge. Boomers, GenX’ers and Millenials all look at the world through a different lens and serving them requires different approaches.
Brokers have figured out that they cannot make money on the brokerage side and but for ancillary services like mortgage, title and escrow, they would be broke. They also now realize the good news/bad news situation that the consumer relationship is under attack from all sides. While this has created a need to address “untraditional” interlopers, it has also provided the opportunity for the broker, and NOT the agent, to control the relationship with the consumer. Brokers realize that if they control that relationship, there is the potential to actually make money from brokerage operations. This places the broker/agent relationship squarely in conflict.
This dynamic, fostered by governmental pressure and scrutiny, has encouraged some brokers to adopt different models and for agents to actually want to be DIFFERENT than their peers, not just from a compensation perspective but from a service point of view.
Lastly, Realtor Associations, once tied at the hip to the MLS at the county level, have become bit players in larger regionalized MLSs necessitated by the need to serve market areas that do not conform to county geography.
Realtor Associations now face a very different industry that they serve. [photopress:Control_2.jpg,thumb,alignright]
It is no longer a one-size-fits-all environment. They have constituents at the broker and agent level who no longer will subscribe to a single way of operations, primarily because their customers won’t let them.
Realtor Associations have survived because, at a macro level, they have enabled their members to be successful. Judging from the people that I met last week, leaders of Realtor Associations and their MLSs are struggling to first understand the historic changes that are taking place and secondly, how they can move their organization to a place where they support ALL of their current membership.
The strength of the Realtor Association is in its membership. In these changing times, it is not a foregone conclusion that this strength will always be present. And a smaller and/or weakened Realtor Association will absolutely have an impact on how we buy and sell real estate.
About the Author: Russ Cofano
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12 Responses to “Future of Realtor Associations”
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As always, Russ, your view is always interesting and appreciated…
For others, during the Blogging seminars that Russ and I have done in the past, we always start with a discussion of the changing dynamic between Local MLS’, brokers, and Realtors. It is only through repetition (bloginar after bloginar) that I stopped being shocked just how unaware many Realtors are at how the internet is changing the demands and expectations of consumers.
Russ,
The industry has had lots of time to adapt and change. Hopefully now we will see some changes. Your post makes me very hopeful. I would gladly get back in and help, as I did for 14 years…but not to help pull things back to same old, same old.
Look at the beating poor Todd Tarson took, and Tom Early had less trouble in Nam!
Insightful and well written, thanks…
There are a few things that the Nat’l Assoc of Realtors continues to do well:
1) Legislative efforts on housing issues;
2) Education, and;
3) They wrote a Code of Ethics for their members in 1913 that they continue to revise and change.
I am sure there are many other things they do well, but these stand out.
Many blog posts ago, I believe it was in one of Ardell’s posts, there was an agent from New York who said her local Realtor Assoc does not enforce their Code of Ethics. A code without enforcement is like no code of ethics at all. One way NAR can stay relevant is to elevate standards even higher than they are now. Higher professional standards (with enforcement and sanctions) translates into many positive benefits for the industry and consumers.
Elevate the profession higher and a professional can charge more for his or her services. Limit professional standards and limit liability and you are limiting your value in the eyes of consumers.
We need to pull apart the Realtor Assoc from the MLSs and make them separate. Yes, they are separate here in the Pacific Northwest but that’s not the way it is in other states.
Once separated, we will see very quickly how relevant NAR is across the US.
Continued relevance is assured if the membership thinks AND feels that there is value in paying membership dues.
Russ, I wish you’d come talk to my group(s) out here in Arizona. I see the writing on the wall and have sacrificed a years worth of business trying to get the Membership to see what I am seeing. No avail.
Associations… especially local ones, don’t realize the power they have to be in a position to deal with the changing business environment. Now is the time to offer partnership to those outside interests that wish to have limited access to data. The day of reckoning is fast approaching and it will be simply too late when it comes.
Ardell referred to a ‘beating’ I recently took from the Membership when I tried to change the silly awards for production program that our Association still gives out. All throughout 2006 my Association worked on a regional MLS, worked on beating the local county level on a program that would have taken away some private property rights, the new budget that would not rely on MLS dues any longer (meaning we had to tighten the belts), and worked on creating a better committee structure for our growing (still) local Association. All these were vastly more important than the awards program, yet the Members showed up in droves to debate the awards program. I’d say they outnumbered all the others who might have showed up to help in the other areas at least two to one. There are times when I have called for a ‘brokers council’ meeting, and would barely get 10 to 15% of the local brokers to participate.
And there is only so much someone like me can do…. on a voluntary basis…. before I have to throw my hands up in the air and walk away.
Would like to talk more on this… but I have to welcome the new Members this morning in our Association orientation program.
Russ,
Nice work. I’m more worried about many firms and even agents failing to change than I am worried about my association. Our association has been preparing for many of the changes you see. Frankly, the changes have been slower in coming than I thought and have lulled many into a false sense of security.
The other issue is that the real estate business has been so good in recent years that agents/firms have failed to adapt to the future. It will take more than just a small downturn to spur REALTORS to make the changes they need to make. That will, in turn, spur the assocaitions on to action. (Apologies to those of you experiencing more than a slight downturn.)
your posts are damn good…
I’m amazed that the MLSs didn’t see this coming when they opened the pandora’s box called realtor.com! The MLSs strenght came from control of access to data. Now you can’t swing a dead cat without finding MLS data.
Assocations should stick to what they do best, setting the rules of how their members interact with one another. Keep it fair, allow for innovation and challenge the industry to be more transparent. Alas, they are now policing their membership to insure the are not “upsetting” other member with their pesky innovation!
Nuts!
Buyers and sellers are becoming their own realtors. Much like other industries the consumer is more informed and has a greater amount of control with the freeing of market information. For a large segment of the population the realor will be a thing of the past, a relic like vaccuum cleaner salesmen. Discount realtors will become the norm.
Realtors will have to provide a real value (monetary or other) that cannot be gained by buyers or sellers on their own. Commissions will come down to something reasonable like 1-2%, or even a flat transaction fee.
For some the services of a realtor will be desired, but this will be a niche market at best.
Aaron,
You are wrong. Buyers and sellers cannot become their own “realtors” because REALTORS are agents and brokers who are members of the National Association of Realtors, a trade group whose members have a certain set of standards, certain educational requirements and who agree to abide by a code of ethics. Agents and brokers who are not REALTORS do not fit the traditional definition of “real estate professional” and accordingly, are not considered as such.
And you’re wrong about that other stuff too.
Aaron,
I think the real estate industry will go the way of the Accounting Industry.
Some use a CPA, some use H&R Block, some use Turbo Tax and some do their own return. That model seems to fit real estate best.
I think even Marlow would agree that I am one of those non-Realtor real estate professionals. Mainly because I was a Realtor for 14 years and didn’t change anything when I switched to “non-Realtor”
As I look to the future of our ever changing industry, I think it’s important to understand that just because the consumer has more information “Access to the MLS” it does not make them qualified to accurately interpret and act upon the data they have in their possession.
Just as WEB MD gives consumers, the opportunity to be MORE educated regarding diagnosing and treating options. It does not make the consumer qualified to be a doctor. He who treats himself has a fool for a client.
The value in a Realtor cannot be measured alone just by the information we control. It can only be gauged in the services we provide and the costumers we serve.
It is our industries responsibility to educate the public on the values of using our services, and the potential pitfalls if you decide to do it yourself.
Paul Roy
Sales Manager
Coldwell Banker Adams Realty
Tri-Cities Wahington
The Napa Valley of the Pacific Northewest
As a REALTOR in a city where we changed the name from MLS to BLC I believe the old-timers are trying to change the rules to prevent the future from coming. In the end the internet and the future will be completely different in 10yrs. The next generation of”REALTORS” are coming and one day the technology will overcome the “Tech Haters”.