Trends 2024: NAR is at a crossroads and must take bold steps
The National Association of Realtors is at risk of becoming irrelevant — or worse. T3 Sixty industry consultants offer their take on how it must reshape itself.
Editor's note: Since 2006, the Swanepoel Trends Report has provided in-depth research and analysis to help leaders understand the forces shaping residential real estate. This exclusive series of excerpts highlights each trend featured in the 2024 report, which was released in November 2023.
NAR Must Fundamentally Change or Fail: The National Association of Realtors has played a vital role in maintaining the health of the real estate industry, but now its own vitality is at risk. The organization must reshape itself in terms of structure, operation and — crucially — communication to its members, many of whom are unaware of all that NAR does.
"NAR is a very important organization, both for the consumer and for the Realtor — the advocacy and structure it provides to the industry is invaluable and must be protected. To help this effort, T3 Sixty analyzed the recent challenges that NAR has had and provided solutions to consider in this chapter. We believe it is a critical time for NAR and the association world, and the time to act is now," said Jack Miller, president and CEO of T3 Sixty.
This excerpt explores ways in which NAR's board structure and governance should change.
NAR needs to refine its leadership structure by reducing the size of its board of directors and executive committee, and by adding experienced, proven leaders on its leadership team and including staff members beyond the CEO.
NAR's leadership team represents this challenge. These are all dedicated professionals who have volunteered countless hours and given their best, no doubt, to the association. But, to speak plainly, these are professional volunteers with limited experience in running and managing large organizations.
Would these same volunteers be paid to manage a $250 million revenue organization in another industry? Compare the qualifications for board level seats at most other large organizations, and the discrepancy in experience and qualifications will leap off the screen.
Take, for example, the board of the US Chamber of Commerce. It has 14 members to NAR's seven, but look at the titles of the chamber's board members. These leaders have run significant companies and bring serious business experience, connections and expertise to the table.
NAR's board members outside of the CEO, while dedicated, run single-location brokerages at most. The most senior leadership body of a $300 million organization simply requires more experienced leadership to effectively compete and lead. In addition, most NAR board members serve for one to two years. Many of the chamber board members have three or more years on the board.
It is not that NAR's board should copy the chamber's board, but reviewing the two side by side (see above) presents a stark difference and illustrates the point made in this section and chapter.
Making local boards stronger
The local board structure, similar to national boards, needs strengthening. Minimum standards for board members and longer terms to allow board members to truly serve in their role.
Diversifying the board to include non-Realtor members, such as builders, developers, investors, and local bankers, would add rigor and accountability to the board and focus on the local mission.
Inviting leaders of other real estate-related societies, such as NAHREP, NAREB, AREAA and the LGBTQ+ Alliance, as advisory or full board members could also be used to diversify perspectives on the local market and membership.
Financial accountability should be strengthened at the local level with more standardized reporting for membership on accounting and finances. Nonprofits have standardized benchmarks, such as the percentage of donations that go to administration; similar standards can be established at the local association level to create better transparency and accountability.
A closer look at one of NAR's self-improvement efforts
NAR made an attempt to improve its governance with a 50-member presidential advisory group, a structure that exhibits the organization's dysfunctional structure now. The group published its recommendations in 2021. All of the changes were minor and did not remotely touch the core changes needed — they nibbled at the edges of the issue, for example, effectively reducing board size from 1,092 to 1,044 members.
Credit to NAR for trying, but the recommendations will lead to very little, if any, fundamental change. Changes need to be much more substantial.
Note: T3 Sixty and Real Estate News share a founder, Stefan Swanepoel.