The National Association of Realtors (NAR)® holds its members to a higher standard of professionalism, enshrined in its code of ethics.
Well, at least, it claims to.
Licensees and the public more broadly have recently grown uncomfortably aware that those in charge don’t always follow their own rules. In fact, many adopt customs and practices that are entirely antithetical to those exposed by their ethical structures.
Following a New York Times investigation into years of allegations of rampant sexual harassment, retribution and discrimination, the president of NAR resigned. That’s news, folks, after a century of operations.
NAR’s subsidiary, California Association of Realtors (CAR®), maintains its own list of ethics violators on its website. Individuals who violate CAR®’s code of ethics may be fined, suspended, expelled from the organization or otherwise reprimanded.
Editor’s note – In a likely effort to save face, this list is not publicly available.
In order to access information about CAR®’s ethics violators, it is necessary to be a member of CAR® and have an account on its website — which not only requires someone to be a licensed real estate broker or their agents, but to pay exorbitant yearly dues that far exceed the value they receive.
Veiled by mystery, this is on par for an organization that fires whistleblowers and silences victims with nondisclosure agreements on the regular, according to the investigation.
Related article:
The ripples continue for NAR’s troubles
It’s high time this dynasty dinosaur go extinct. This resignation as acknowledgement of fire where there is smoke, may well be the new beginning of brokers managing their own affairs, which includes the MLS network that NAR controls.
In fact, many brokerages are taking advantage of the scandal to quickly find the lifeboats before the ship goes fully under.
Popular online brokerage, Redfin, is requiring its brokers and sales agents to leave the trade organization, according to the New York Times.
For Redfin, the sexual harassment allegations which recently came to light are the last straw in a long line of complaints against NAR®. Redfin’s representative on NAR®’s board chose to leave the board earlier this year due to the organization’s compensation requirements.
We’re not going to comment on the more sordid stuff here, and will instead focus on the salacious business practices at the root of this discontent.
NAR®’s compensation rules create a number of questionable practices in violation of anti-trust law, including:
- preventing multiple listing services (MLSs) from disclosing fee rates;
- misleading buyers into thinking the buyers broker’s services are free;
- allowing buyers brokers to filter MLS listings based on the sellers’ fee rates; and
- limiting lockbox access to NAR members only, not DRE licensees in general.
Related article:
Brokerage Reminder: CAR membership NOT required for MLS access
Further, nationwide brokerage, Re/Max, will no longer require its agents or brokers to be NAR members. Essentially: stay in with the corrupt party if you like, but you’re free to bail if you’re growing queasy.
Re/Max’s brands include colossal brokerages like:
- Coldwell Banker;
- Century 21 Real Estate;
- the Corcoran Group; and
- Sotheby’s International.
This opt out is related to a lawsuit, which claims the NAR membership and compensation requirement for MLS participation violates anti-trust laws.
The Re/Max brand settled out of court for $55 million, which is going into a settlement fund. However, other participants to the lawsuit — including NAR® — will fight the anti-trust allegations in court, according to HousingWire. They have the funds from membership to do so.
Some practicing brokers and agents erroneously believe NAR® membership — or membership with organizations under NAR®’s umbrella, like CAR®— is legally required to practice real estate. Many, if not most, CAR members misbelieve they need to be a CAR member to have accession to the local MLS
But this is simply not true — a lie routinely peddled by NAR, like a demonic mantra, to retain and grow its membership coffers.
Editor’s note — For access to the MLS, local associations of realtors (AORs) give brokers the option of becoming a member of NAR®/CAR®, or an MLS participant/subscriber only. Thus, trade union membership is not required to practice real estate — nor is it required to access an MLS (unless your employing broker as a CAR member requires it).
To subscribe to the MLS, you only need to:
- have a valid California real estate license;
- be a broker, or a sales agent under a broker who is a member of the MLS;
- apply for access to the MLS; and
- pay a reasonable MLS fee, which varies by AOR.
Related article:
NAR’s antitrust lawsuit returns as defensive attitudes persist
I want to break up with CAR — but what about forms?
CAR® publishes real estate forms and, over the years, firsttuesday has received many messages about Realtors® requiring agents to only submit purchase agreements on these trade forms. Therefore, to many, CAR® membership appears to be a requirement simply to gain access to real estate forms.
However, RPI forms are free to download and use (no membership required, ever).
Further, the Department of Real Estate (DRE) requires agents to present all legitimate offers to their clients, no matter whether the form publisher is RPI, CAR®, another independent publisher — or even written up on a lipstick stained cocktail napkin. Agents who fail to submit all offers commit a reportable offense, as reiterated by the Department of Real Estate (DRE) again and again.
But some of these misinformed licensees are unaware that not only is it unlawful to refuse to accept forms from other publishers, but many CAR forms are provided as a matter of trade union policy — not mandated by law or judges.
Editor’s note – Connor Wallmark, firsttuesday President and Production Manager, was subpoenaed in a trademark and copyright infringement lawsuit and countersuit between CAR and PDFiller to testify in 2018. firsttuesday was not a party to the litigation, but as a competitor, does publish real estate forms used for the same purpose as CAR forms.
Related article:
Letter to the editor: Which real estate forms are required to complete a home sale?
For example, some forms that have become “standardized” by CAR® but are not legally mandated, nor are they published by RPI. These vigilante forms include CAR’s Agent Visual Inspection Disclosure (AVID), which is redundant and already covered in the disclosures which actually are mandated by the state, such as the Transfer Disclosure Statement (TDS). [See RPI Form 304]
Another example is CAR®’s Property Entry Advisory Declaration (PEAD), which is not mandated and covers information best discussed in verbal discussions based on the broker or agent’s awareness of defects. Thus, skipping these proprietary forms in lieu of a single, streamlined purchase agreement is simpler and more effective. [See RPI Form 150]
Further, CAR® includes several provisions that RPI deliberately as risk mitigation policy excludes from its forms, including CAR®’s:
- arbitration provision, as arbitration decisions are final, unappealable, and do not require application of applicable law;
- attorney fee provision, which encourages disputes to remain ongoing;
- time-essence clause, which is improperly used by sellers in rising markets to obstruct the transaction before the buyer or broker have had time to comply with the terms of the seller’s contract; and
- unenforceable liquidated damages provision, which creates expectations of windfall profits, exclusively for sellers.
View and download all RPI forms here.
Brokers: it’s finally time to say goodbye to CAR®
The trade union has been irrevocably tainted by scandal, whether of a sexual or professional nature.
Particularly as we pivot into the recession economy, brokers need to ask themselves what they can do to reduce their operational costs, attract good agents with a stellar track record and remain competitive.
Ask yourself: what has CAR® done for you lately, besides distract with its fetish for scandal and conventions? What other productive use could you find for your and your agent’s annual membership dues? And wouldn’t your agents and broker-associates look to you with gratitude if you were to unburden them from the financial and policy shackles of CAR®?
The trade union has been unmasked for what it is — a predator in the boardroom, a predator in the MLS.
The trade union’s dirty laundry has been aired yet again, and this time the misconduct is not only more morally repugnant, but also totally visible and known to the clients you represent. And there is more to come.
The “higher ethical standard” previously associated with the term “Realtor®” has been inverted in the realm of public opinion. Realtor® no longer denotes ethical conduct. Most brokers long ago dropped the word “Realtor” from their corporate name.
Realtor® denotes avarice and scandal.
Ask yourself: is this who you want to associate with?
