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August 15, 2018

Your Guide to Organized Real Estate

The more you know about your industry, the better, has always been our belief. Knowledge is power (Toffler.)

"Organized Real Estate" is a vague term, but when John and I hear it, we think of the three levels of the REALTOR® organization, not known or understood by most members. It is called the Three Way Agreement.

Every Association of REALTORS® is separate from all of the others almost like a franchise (Each Office is Individually owned and Operated.)

NAR does not "own" or "control" the local associations, and the state associations do not "own" or "control" the local associations.

They are all separate and distinct, brought together by something referred to as the Three Way Agreement.

The Three-Way Agreement (From the NAR Answer Book.)

Along with considering various scenarios for the future and undertaking an internal audit, REALTOR® associations need to understand the underlying structure of organized real estate, before making decisions related to shared services, collaborations, mergers or consolidations.

First of all, the NATIONAL ASSOCIATION OF REALTORS® is a large organization with state and local associations, each of which must clearly understand and proactively adhere to the various elements described in this chapter.

The term “Three-Way Agreement” refers to the structure of the REALTOR® organization. This agreement was established among the National Association, the state associations, and local boards and associations. With this agreement, the National Association grants each association and board the right to control the terms “REALTOR®” and “REALTOR-ASSOCIATE®” within its territorial jurisdiction. It also permits associations and boards to allow individuals who are qualified for membership to use the terms REALTOR® and REALTOR-ASSOCIATE®. In turn, the state associations and local boards and associations agree to:

Accept the charge of properly granting and regulating the use of the terms “REALTOR®” and “REALTOR-ASSOCIATE®.”

Subscribe to the Code of Ethics of the National Association

Uphold and enforce the Code of Ethics within the board’s/association’s jurisdiction

The REALTOR® organization is a “federation” or, in other words, a “union” of organizations. It is comprised of member associations that are both state and local associations of REALTORS®. The “federation” is formed by what has become known as the “Three-Way Agreement” which means that all local associations and their REALTOR® members are members of the state association of REALTORS® in the state where their association is located and also of the NATIONAL ASSOCIATION OF REALTORS®.

The federated structure strengthens the REALTOR® organization by providing a framework for effective communication, delivery of goods and services, and enforcement of the REALTORS® Code of Ethics. The size of the REALTOR® organization (over one million members at this writing), also a product of the federated structure, contributes substantially to the political influence of the National Association, thereby enhancing its effectiveness in lobbying for causes that contribute to the protection of private property rights.

In the simplest of terms, the federated structure allows the REALTOR® organization to use its combined resources (both human and financial) and influence to have a unified, powerful voice in shaping public policy, set recognized standards for ethical real estate practice, and contribute to the betterment of the real estate industry.

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