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The Alabama Association of Realtors (AAR) turned heads last week when it sent a letter to the National Association of Realtors (NAR) and asked for greater flexibility in allowing members to decide which levels of Realtor associations they would like to join. But according to many in the industry, Realtors in Alabama are not the only ones seeking more choice.
“There is a small but growing number of people who think that the whole structure of how things have been needs to be challenged and perhaps changed,” Steve Murray, the co-founder of RealTrends Consulting, said in a statement. “They are questioning if they should have a choice.”
Murray said he has spoken to a growing number of brokers who are pushing back against the current three-way membership model. They are telling their local and state associations that they will no longer abide by the longstanding practice to require all agents to be NAR or association members if the broker is a Realtor. Additionally, they note they will no longer be collecting their agents’ membership dues for the associations.
Jason Haber, a broker at Compass and the founder of the American Real Estate Association, said he was impressed by the courage it took for AAR to write and submit its letter.
“It is a very difficult thing to do, and I am sure it wasn’t easy, so a ton of credit for their conviction,” Haber said. “I also think that this is a significant moment for the industry because these legacy systems that have been in place for generations are now being called into question.”
Like Murray, Haber doesn’t believe AAR is the only association considering a move like this.
“It is difficult to be the first one and that is why I feel it is a real courageous moment for them, but I don’t think they will be the last one,” Haber said. “This is how change happens. It takes someone with courage to speak up and take action, and others will follow that lead.”
Membership feedback
According to AAR’s letter, which was written by CEO Jeremy Walker and President Senia Johnson, the trade group felt compelled to bring the issue to NAR’s attention after members voiced their desire for a variety of membership options in AAR’s 2024 Member Services Survey, which was published in July.
The survey found that while the vast majority of the nearly 1,200 respondents rated AAR and their local associations as “good“ or “excellent,“ only 49% gave NAR the same rating. Additionally, 45% of respondents rated NAR as “fair“ or “poor,“ in contrast with 17% for AAR and 15% for their local association.
When asked whether would like to choose which levels of the Realtor organization they belong to, 57% of respondents said they are strongly or somewhat in favor, while just 15% strongly oppose having options.
If given a choice, 46% said they would still join all three levels, while 33% said they would join only their state and local associations, followed by 13% who would join only their local association. Only 4% said their lone affiliation would be with their state association, while less than 1% would be lone affiliates of NAR.
The survey also noted that in the past year, 30% of respondents said they have considered withdrawing from NAR, while 25% are somewhat or strongly in favor of their brokerage or franchise withdrawing from the national trade group.
When asked if they were in favor of their local association or AAR withdrawing from NAR, these shares jumped to 37% and 40% being somewhat or strongly in favor of a withdrawal, respectively. Additionally, 49% respondents said they were somewhat or strongly in favor of reducing to a two-way membership with state and local services.
“As more members express their frustration with an organizational structure that they believe does not work for them or that they do not want to be a part of, these frustrated members are actively looking for alternatives to REALTOR membership,” Walker and Johnson wrote in their letter.
“If we fail to act, we may lose these members forever. However, by allowing greater flexibility, we may be able to retain them as members at one or more levels of the organization, based on where they see the most value and choose to belong. We believe that empowering our members with this decision-making ability will be in the best interests of the organization in the long term.”
Similar views elsewhere
According to an East Coast-based broker who requested anonymity from HousingWire, most agents don’t really understand what the value is in joining NAR.
“Agents don’t really get anything from being a member of NAR,” the broker said. “I think that it is an important political voice, but I don’t know that you necessarily need to make every Realtor pay and force them to be a member of NAR to have a strong voice in the political arena.”
The broker noted that there are many agents who share similar views to Alabama Realtors, and that a lot of their frustration in the three-way agreement stems from the fact that NAR treats all housing markets and states the same, potentially ignoring local customs or rules.
“I think they overreach sometimes by taking a national stance on things in the rules and regulation they force upon all members. We are not all the same and I don’t think NAR takes that into account,” the broker said. “They are frustrated with NAR for putting us in the position of the lawsuits, and then putting out these mandates and not allowing local leaders to decide what is good and right for their local association.”
For Murray, an additional source of frustration stems from agents and brokers who serve multiple or widespread communities having to belong to multiple, overlapping associations to access MLSs and serve their clients effectively.
“They are wondering why they need to belong to eight or 10 different Realtor associations to get access to three or four MLSs,” Murray said. “I know a lot of them who want that practice to end. NAR is going to have to actually present a case as to why anybody should pay their national dues.”
In an emailed statement, a NAR spokesperson defended the Realtor organization’s three-way membership, claiming that it “empowers” members and consumers “with access to localized resources and services while also benefitting from a national voice, a unified advocacy platform, and a single Code of Ethics.”
The spokesperson also noted that NAR’s annual dues are currently set at $156, while state and local associations set their own dues.
While those who work in the industry see AAR’s letter as a positive for real estate, Stephen Brobeck, a senior fellow at the Consumer Federation of America (CFA), does not believe a mass departure of agents from NAR will be a good thing for consumers.
“If the request reflects Realtors’ desire to escape NAR’s new rules on agent compensation and its Code of Ethics, it carries with it substantial long-term risks of increased litigation and public censure. CFA has criticized elements of both the settlement and the code, but we also recognize that they provide some marketplace order and benefit to consumers,” Brobeck wrote in an email.
“We worry that absent these rules, state regulators won’t be able to cope with the many agents and brokers the industry’s own 2015 DANGER Report identified as ‘incompetent’ or ‘dishonest.’ We keep hoping that reformers within NAR will initiate changes that give real consumer meaning to Realtor membership. We don’t see these changes as originating at the state level.”
Although it remains unclear if AAR’s letter will lead to any material changes, Haber believes that simply publicizing this issue is a win for the industry.
“This is a shift. We have always accepted the status quo, and I think in the long term, this is good. It is good in the name of transparency, choice and accountability in the industry,” Haber said. “No matter how this goes, I think it is a net positive for the industry.”