Now that the attorneys have been awarded nearly $1 billion, I believe we are going to see a lot more attorneys come out the woodwork to try to find additional vulnerabilities in our policies and procedures/traditions. I believe the attorneys and DOJ are just getting warmed up. Here’s one potential vulnerability that keeps me up at night….
In many of the proposed Franchise and Brokerage Settlements, those real estate companies can no longer require NAR membership. At the same time, NAR policy dictates that if a broker is an NAR member, all of their agents must also be NAR members.
Here’s what I worry about…. What if a broker involved with one of the settlements has an agent that does not want to be a REALTOR®? Does the Broker adhere to the terms of their company’s settlement and not require REALTOR® membership or do they follow the requirements of their local Association and force their agent to a member to adhere to NAR Policy? While some brokerages get around this requirement today by setting up separate referral companies, how do they handle the situation when one of their top producers refuses to join their local, state and national association?
Now here’s what could get even stickier. What if a broker-REALTOR® from Brokerage X that is NOT part of one of the large company settlements requires their top producer to be a REALTOR. That top producer comes to their broker and tells them they no longer want to be a REALTOR. They tell their manager from Brokerage X they are being recruited by Brokerage Y who is prohibited from requiring NAR membership. The top producer moves from Brokerage X to Brokerage Y. The brokerage adhering to NAR policy loses a top producer because of an NAR policy. What kind of trouble do we believe that might cause in our industry?
With brokers now suing NAR, and local MLSs and Associations over other policies they believe are coercive, I think we need to look at every rule that could be perceived as anti-competitive in any way and get rid of them as soon as we can. I believe every market needs to get serious about offering an Open MLS, eliminating restrictive Lockbox policies and seriously look at the conflict discussed in this article. I am not sure how many more lawsuits our industry can handle at this point. Let’s get proactive before it’s too late.
Very interesting from a recruiting and retention perspective. Two things have been on my mind in this regard. First, some states have independent contractor laws which might determine that if a broker compels NAR membership, it would create an employer/employee relationship. Associations who apply the optional requirement of membership should have a lawyer investigate this concern with the state labor board.
Secondly, the mandate to join NAR has been an optional provision of NAR policy for decades and Associations that have chosen to remove the mandatory rule have not lost any members.
Realtor Associations at the local, state, and national level combine to deliver incredible value for the annual dues. Sure, some could do a better job of communicating that value, but overall it is exceptional. Many of the largest and most prosperous Realtor Associations in America are in States that do not require membership.
These are very important observations & concerns. I, too, worry about many of these same things. To throw another wrench in, I often worry about the potential argument charging agents with the inability to carry out our client responsibilities due to the “requirements” of being association members. For example, I’m licensed in Texas and can write contracts throughout the state. If I have a client in Dallas looking to purchase a home on the lake in Austin, I can legally write that contract, but I can’t show that home because I don’t belong to the Austin MLS. In certain regions, we have agents who must be members of 2-3 or more different MLSs all needed to effectively serve their client base. This adds unnecessary costs and inefficiencies to the home buy/sell process.
Unfortunately, the ocean is full of blood now; the sharks have been lured in and will continue hunting for opportunity. If we don’t find ways to fix some fundamental issues, we will all continue to be victims of the issues that provide the most $$ potential for others.
Thank you Marilyn, While I am in Canada and not immediately impacted by all of this, we are in the US shadow and have the same issues coming at us. As a 40 year veteran in Real Estate, I feel that what you are saying is so true and so important. The world has changed and many of our traditions, rules and business practices are anti-competitive. They are no longer acceptable. For organized real estate to survive and thrive, it must change it’s perspective and do so quickly – ahead of more lawsuits and legislation.
The consumer deserves to have the service of great real estate professionals. Let’s all act together to create a fair, transparent and open marketplace so that we can serve our clients.