A response to a broker’s open letter from NAR CEO Dale Stinton

6 steps to moving the industry forward as a national trade group - PUBLISHED ON FEB 2, 2017 - BY INMAN Staff Writer

Editor’s note: After contributor Daniel Bates wrote an open letter to the new CEO at the National Association of Realtors, he received this response from current NAR CEO Dale Stinton. Stinton agreed to allow Inman to publish it.   The email has been edited slightly for style and length.

​Dear Daniel,

I read your “open letter” on Inman regarding some ideas you have for the National Association of Realtors to do a better job. (You offered similar thoughts back in 2013, but regrettably, I didn’t see that one.)

Your time is valuable, and because you took the time to openly and honestly pen your thoughts, I want to acknowledge that upfront. As a 30-something broker of a small office, with a decade of experience, you are very important to me and NAR — and in no event would we purport to “judge” you, other than as a concerned, decent, core constituency.

I’m hoping the best way to address your comments is to take them one at a time, seeking to provide clarification where I can. This has ended up a much longer informational exchange than I originally intended. But my motivation is to acknowledge your point of view while providing context or clarity to the thoughts you’ve introduced.

By no means is my intent to offer a rebuttal or to suggest a right or wrong position. I think you’ll find we agree on more than you might think — I just want to begin a conversation and to let you know you’ve been heard.

Step 1: Goals
Always a good place to start. The mission statement of NAR, in brief, is to help our members ethically and successfully conduct business and protect private property rights.

The more specific priorities of President Bill Brown for 2017 are:

• Preserve the Mortgage Interest Deduction (MID)
• Support a reinvented stable, Fannie Mae, Freddie Mac and FHA, thereby preserving the secondary mortgage market and the 30 year mortgage
• Preserve 1031 exchanges
• Research and develop ideas which help our members plan for their financial future and retirement years
• Research and develop policies and potential government actions which would allow for Trade Associations and Small Businesses to offer health care plans across state lines (7 years ago we were literally one vote from getting small business healthcare approved, afterwards Obamacare took over)
• Develop the Commitment to Excellence membership strategy the NAR Board of Directors approved in November, 2016

Step 2: Build a brand
In your comments, you accurately link brand value to what members far and wide consistently express as our most sacred set of principles — the Code of Ethics. Yet there is also no single issue that has been the subject of more debate than the COE and professional standards.

More specifically, there has always been much talk about the respect for, the violation of and the challenge in enforcing that code, particularly as it relates to dispute resolution in an industry and system that self-regulates.

Many members, including me, agree with your point of view — for the brand to continue to carry value, to mean something in the future, to be a true differentiator, we must look to the principle it’s built on — what does it mean to be a member of the National Association of Realtors?

Call it a higher bar, call it a commitment to excellence, call it a renewal of our core principles — call it what you like — we need a new story to tell, one based on more stringent respect and adherence to our core principles, performance standards and subsequent actions, which demonstrate that “trusted advisor” is more than just a concept to which we aspire.

In November, the NAR Board of Directors approved a member-driven “commitment to excellence” report, which outlines a new path for our membership. Albeit voluntary, it is a step in the right direction, and time will tell if and when the desired effect will be achieved. Right now the effort is largely top-down; for it to succeed, the grassroots must demand it.

Additional information: Every couple of years, we engage a highly regarded New York trademark expert to update the literal value of the Realtor brand. The most recent valuation, about a year old, puts the big blue “R” and the term Realtor at $5 billion. Eighty-six percent of the 5-million-plus residential transactions that were completed in 2015, were completed by Realtors. The other 14 percent were split fairly evenly with 7 percent to non-Realtor licensees and 7 percent to FSBOs (for sale by owners).

Close to 70 percent of the Realtor transactions were started by “referrals.” So, is the brand effective? Does it translate to your bottom line? When your members are doing practically all of the business in the space it can’t be completely coincidental.

However, to again reinforce your views on the brand, it is my opinion that this extraordinary valuation may be based more on our sheer size, longevity and the overall reputational value of organized real estate earned over 100 plus years.

To be sure, there are plenty of our own members that still enunciate the term as “Real-a-tor”. Whether this intrinsic brand value bleeds its way down to each and every member is a fair question. But there does seem to be general agreement — raising the bar raises the brand.

Step 3: Education
To your comments about education specialties, some 25 years ago, NAR’s governing body made the decision to get out of the “education” business as it was deemed the purview of brokers, state and local associations, and our institutes, societies and councils (CRE, IREM, CCIM, CRS, CRB, RLI, WCR, SIOR).

But like many things at NAR, these things can be cyclical, and what goes around eventually comes back around.

We currently have two primary educational vehicles. The first is the Center for Specialized Real Estate (CSRE) a wholly owned not-for-profit subsidiary of NAR, which includes among others ePro, the Green Designation and Accredited Buyer’s Representative (ABR). Approximately 80,000 members take courses in these subject matter areas each year.

The other initiative we have been pursuing is Realtor University.

Started five years ago to offer a completely online master’s degree in real estate, in 2016 it was certified as an “accredited” degree granting institution. This accreditation will now allow us to pursue our real long-term goal, which is to partner with major educational institutions and universities around the country to offer Realtors online real estate-related education course work leading to college credit, certifications, associate’s degrees and even bachelor’s degrees.

(Surveys indicate that as much as 50 percent of our membership have no post high school credits.) The virtual online nature of the University will allow us to reach every member and also allows the member to work at their own pace on their own schedule.

Realtor University is funded entirely through tuition, scholarships and the accumulated reserves of CSRE — in other words, resources are allocated to the program, but none of your annual dues fund it.

Step 4: Value
As a frame of reference, Charleston Trident Association dues are $111, South Carolina dues are $165 and NAR dues are $155.

You mention one of the tangible benefits provided by SCAR is the Real Estate Forms Program. I’m glad you find value in the forms program because in partnership with our colleagues at SCAR, NAR is currently paying all of the costs for the forms software and libraries that you are using.

Additionally, we have negotiated discounted rates with ZipLogix (the national forms company provider, of which NAR owns 30 percent) for an e-signature solution, the mobile version, as well as a broker program.

I’m sorry you do not find value in what we call the “affinity” program. We have 35 separate corporate programs where we’ve negotiated member rates from the Chrysler deal to Dell, to FedEx, to DocuSign — and a bunch more. All I can tell you is 875,000 members took advantage of at least one of these programs in 2016.

Thank you for the mention of RPR (Realtors Property Resource), which grew by 18 percent in 2016, has 635,000 user accounts and is available to 1,120,000 members.

Website traffic statistics on total user sessions grew 83 percent in 2016 and exceeded 10 million individual sessions. I hope your board decides to take another look at it, since 90 percent of all the local associations and MLSs are signed up.

I’m sure we can resolve the “data use” issue as RPR does not resell or otherwise generate commerce from your data. That’s why it’s a no-cost service to our members — and remember, you can participate on RPR using your member (NRDS) ID, whether or not your local association chooses to participate.

As mentioned in the first section, we are working very hard to figure out how to get better health care coverage to our members — who, as you stated, are largely independent contractors. We’re encouraged by the administration’s statements about creating competition across state lines, as that is similar to what we were trying to accomplish with the small business health care program we were one vote away from getting approved right before the market collapse back in 2007-2008.

Step 5: Wasteful spending
Since you suggested the single largest source of wasteful spending is lobbying, most of the specific information I offer will come in this section.

Respectfully, I do want to correct your point about spending $100 billion on our lobbying since 1999. I think you meant to say $100 million over that 17-year period.

Even so, that’s a lot of money, and we need to be accountable for it.

I am pleased to tell you that when we talk about getting things done (or, in a lot of cases, keeping things from happening) in Washington, the NAR team does not “grease any wheels.” The old-school tactic of “hammer them until they submit” or the slimy “buy them off” approach does not work in D.C. any more, at least not for how NAR operates.

Our approach is sublimely simplistic: We have a reputation on the Hill, second to none, for doing our homework, providing the highest-quality research and applying reasoned conclusions to our arguments.

More often than not, this collegial and far more intellectual approach is extremely well-received and appreciated, since many of our peers and others still employ a fear based threat infused style of advocacy. (It does not hurt that we have over 1.2 million members.)

Feet on the ground will always be worth more than money. And we have many more feet than you realize.

As a result of our efforts the last several years to engage the public in our legislative and regulatory causes, we now have more than 8 million consumers and property owners in a massive database who have indicated they are ready and willing to be part of our call-for-action network should we call on them for help.

This virtual property and homeownership coalition will be critical to us going forward, as the rules and methods of advocating in Washington are certainly fluid.

Additional information: At any point in time, we are monitoring 35 to 40 federal legislative and regulatory issues that could either help or harm real estate and real property issues. You will never hear how we resolve many of these threats because our goal is to make them go away without drawing attention to them, embarrassing anyone or “outing” any of the folks who helped us.

You asked for some specific examples of political accomplishments that would not have just eventually worked themselves out if NAR never existed — here are some we can talk about that I think will resonate:
​

• 2008 – Carried Interest: NAR successfully convinced Congress to shelve a planned tax increase on real estate partnerships.
• 2008 – We kept alive and helped reform the National Flood Insurance Program (NFIP), keeping it renewed for an additional five years through 2017.
• 2008 – Commercial Real Estate: Tenants in Common; NAR successfully negotiated an exemption proposal with the Securities and Exchange Commission that would permit experienced commercial real estate professionals to provide real estate services to their clients interested in TIC securities.
• 2009 – Protecting Realtors Business Interests and Activities: Banks in Real Estate; after eight years of continuous struggle to convince Congress that real estate is not financial in nature and banks should not be allowed in the real estate brokerage business, NAR achieved its objective. On March 11th, 2009, The Omnibus Appropriations Bill, H.R. 1105, was signed into law, and with it a declaration that, going forward, neither real estate brokerage or real estate management can be classified as a financial activity.
• 2009 – Expanding Housing Opportunities: A NAR-initiated First-time Homebuyer Tax Credit; H.R. 1, the “American Recovery and Reinvestment Act of 2009,” was signed by the President on February 17, 2009. Included was an $8,000 tax credit for first-time homebuyers. Over one-third of all properties sold in 2009 used the First Time Homebuyers Tax Credit. The credit was extended to April 2010 and included a move-up buyer’s credit after more work from NAR.
• 2009 – Extended GSE Loan Limits another year
• 2010 – Extended FHA Loan Limits for 2 more years (through 2013)
• 2013 – Preserved Mortgage Cancellation/IRS income recognition
• 2014 – Convinced GSEs, the FHA and HUD to relax credit standards and to be responsible but reasonable
• 2015 – Convinced FHA to lower premiums by 50 basis points while still being fiscally responsible
• 2015 – Reauthorized TRIA (Terrorism Risk Insurance Act) for 6 years
• 2016 – Convinced Congress to pass new FHA/GSE Condo Rules

We continue to advocate for the survival of Fannie, Freddie and FHA until intelligent, responsible reform can occur, thereby assuring the continuation of a secondary mortgage market and the 30 year mortgage

The invention of the Realtor Party in 2011 and the addition of a $40-per-member dues increase is what I’m certain you’re referring to when you observe that you are now required to pay for additional advocacy activity.

The genesis of this major strategic move was the conclusion that although we were highly confident of our abilities to monitor and influence federal legislative and regulatory events, those who would seek to adversely affect the real estate marketplace were shifting their strategies to the state and local levels.

Many of our state and local associations are not particularly experienced in combating these forces in their own backyards, so the Realtor Party strategy was born. Of the $40 per member collected, each year $27 of programs, grants and subsidies are distributed back to the state and local associations to “fit them up” to protect and defend real estate markets and private property rights in their own backyards.

Over the last five years, this has resulted in 16,500 campaigns nationwide helping 1,026 local associations with their local real estate issues. Our success rate is right at 75 percent.

This is all well and good, but what does it mean to someone less interested in condos and residential stuff, with a more specific interest in land sales and land use? Fair question.

In the last several years, the Realtor Party has funded 14 major land use initiatives in South Carolina that were delivered through your board, the Charleston Trident Association of Realtors. They involved smart growth on common ground, local zoning issues, impact fees, rental restrictions, vacant property registry, neighborhood revitalization, urban growth boundaries, school of the future and a diversity initiative.

Combined with a number of other statewide land use initiatives, the South Carolina Association and your board to date has received more than $240,000 in assistance to address these important community needs. I’d like to think that these activities have contributed in some way to a better marketplace for your land-based niche and expertise.

As to your comments on top-level domains (TLDs) — the .realtor offering resulted in 100,000 members signing up in the first year (2015) when it was free, and 72,000 have renewed their domains in 2016. Given there are more than 1.2 million Realtors, your comment about the program being a huge failure seems a little harsh — but it is true we had hoped for several hundred thousand.

The one mitigating factor I offer up is that the entire program was and is paid for by the Realtors Information Network (RIN) a wholly owned subsidiary of NAR’s that is paid royalties to oversee the realtor.com operating agreement we have with News Corp.

Yes, NAR resources are allocated to the program through RIN — however, none of your annual NAR dues are used to pay for the .realtor program. As is the case with a number of our other major initiatives (Credit Union, Real Estate Technology Incubator and SentriLock Lock Boxes, to name a few) all of them are solidly in the black and require no use of member dues.

Step 6: Shake things up
I have not been the CEO for 36 years; this is my 12th year as CEO — but I have worked for four other NAR CEOs in the 25 years before I became the chief staff person.

Out of everything in which you’ve expressed an opinion, this is the only one where I will push back when you characterize our more involved volunteers somewhat pejoratively as “cheerleaders.”

I estimate that between NAR’s volunteer positions and other assignments, those of the 54 states and territories, and the 1,200 local associations of Realtors, there are somewhere in the neighborhood of 20,000 to 25,000 active governing members who give an extraordinary amount of time to upholding Realtor values and helping their communities and fellow members be more successful.

It is true: They usually are very positive and upbeat about contributing to the Realtor organization and family, but they also are not shy about telling us when they think we’ve screwed up or we’re off track.
I am faithful to them and have great respect for their volunteerism.

And I have a similar respect for you for stepping up to be heard. I promise you — we are listening and want to know what you or others are thinking!

To that end, you can find me on Facebook.