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Jan. 20, 2011 - Jumping Ship

 

 

On January 19, 2011, Inman News carried a feature article by Matt Carter with the headline, “South Carolina real estate brokerage drops Realtor affiliation: Company maintains MLS membership''.

 

The article continues, “The largest brokerage in the Columbia, S.C., metro area has dropped its Realtor association membership, saying too many of its agents balked at paying $431 in annual dues in December 2010.” In this Realtor association, that action meant a significant loss of membership (and income), not to mention major tarnish to the Realtor image.

 

Why did the brokerage make its decision to break ranks? "The association here does not have an MLS (and) the agents did not perceive the value" in the Realtor association (local, state, and national), says the company manager. And NAR bylaws state that the Realtor-broker is responsible for the dues of those of associates who do not which to become Realtors. In this case, the company in question would have been facing the alternative of either paying over $100,000 in compensatory annual dues to maintain its Realtor status, or becoming an adversary to its own sales associates by forcing them to pay those dues. The brokerage saw this as a losing situation on all counts.

 

I think back to my former Realtor association days, and I can hear the voice of one of my favorite brokers: “So what? Be glad we got rid of these folks. Anybody who can't afford $400 a year for professional association dues drags the rest of us down. Let's RAISE the dues, and get rid of more of the part-timers and non-producers!” Of course, he'd go on to add something about the non-producers in the business siphoning off commission income with their occasional sales, but in the North Carolina situation, the sales associates will continue to operate and remain in an MLS where association membership is not a requirement for use.

 

I'm not writing about this problem to say “I told you so”, but here is a perfect example of a Life without MLS situation—the Realtor association's greatest threat. And I'm not casting any stones at the brokerage or the Realtor association on all three levels. What I am saying is that Realtors and AE's need to read Carter's article as an object lesson about how to build a stronger association.

 

The key phrase in the story is that the agents did not perceive $431 of value in Realtor association membership. Did the local association need to better market the return-on-investment more effectively? Maybe, or maybe not – that's really beside the point. Maybe, in fact, the product was simply over-priced. Maybe there just WASN'T $431 in association value once the MLS incentive was removed from the equation.

 

“Oh,” you say. “That's not true in the case of our association. I can total up the dollars of each benefit of membership. That amount far exceeds what the members pay in annual dues.”

 

But you're missing the point. Cost does not equal value. As consumers we are faced with the cost vs. value dilemma on a daily basis, and we walk away from a purchase knowing that expense outweighs value and the price is more than we are willing or able to pay.

 

In all successful marketing programs, knowing the competition for your product is important. What's interesting in this case is that the competition for the value items of the Realtor association is its own member, the large brokerage. As the Inman article explains, the broker in this case provides education, dispute resolution, and standard forms – all bottom-line impacting services from the perspective of the sales associates. The brokerage has only experienced one inter-company arbitration in 10 years, and its sales associates don't consider legislative influence a $431 annual expense. Probably the most telling fact is that the brokerage makes significant income from charging its associates for the services it provides, and by dropping Realtor membership the competition for sales associate dollars has been eliminated.

 

It's truly the MLS service that is the value proposition for many Realtors: that's not a new idea. What is news is that when the Realtor membership requirement for MLS services was removed, a major brokerage in an association made a business-based consumer decision that professional association membership is an expendable expense.

 

What that situation must say to the Realtor organization manager is that the organization needs to begin to operate as though membership were truly voluntary, even though 84% of us have the luxury of peeking out from behind the mandatory Realtor membership requirement. Would local, state, and national associations survive without the protection of the MLS shield, if our members had a choice and the Realtor association operated in a genuinely open market?

 

Only when we can answer that question with an unqualified 'yes' can Realtor associations be assured of continued success.

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Jan. 20, 2011 - RE: Jumping Ship

Posted by John Tuccillo

You hit the point exactly! The majority of Realtors think only about the things they absolutely need to stay in business: MLS, mandatory CE, insurance, necessary training, dispute resolution, and business tools. With the exception of the MLS, the broker can supply the whole package. Most Realtor associations set their programs and their budgets with the active members in mind or at best, the successful agents. Those programs are simply not attractive to the majority of the membership who are scratching to survive, even in the good times. Those members will  not and cannot see the value of the association. The saving grace for the associations is that in just about every company, there are association champions who won't let the company leave the organization.

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Jan. 22, 2011 - RE: Jumping Ship

Posted by Dale Smith

Many of the older members of the REALTOR associations remember when the MLS was not a key component in the decision of whether to join an association or not.  Local associations need not only to get back to the concept of providing critical key services that have tangible benefits for the member, but they must also market that value to their own memberships.  Partnerships with key service providers - including brokerages - would be a strategy a for-profit corporation would use to acquire clientsmembers, so why not the same business medel for the REALTOR association?

It's time to throw away the traditional business and 'strategic' plans and re-focus on a business plan that would actually stand up to review in the business community.

 

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A behind the scenes look at organized real estate--what works in an association, what doesn't, and what a long time AE sees as challenges facing the industry from the viewpoint of its professional organization.

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