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Less than a month after the one-year anniversary of the Sitzer | Burnett verdict and just before the National Association of Realtors’ settlement obtained final approval by the U.S. District Court for Western Missouri, another bombshell dropped about NAR.
An expose in The New York Times reveals a jaw-dropping amount of excess in terms of lavish spending, salaries, stipends, perks and other benefits over the past several years. It was even mentioned by one of the attorneys objecting to the settlement during the final hearing.
Once again, we are reminded of an organization that has failed our industry on multiple levels.
The reason all of this is particularly bothersome is that, as agents, we largely have not had a choice to join NAR, as membership is bundled with our local and state Realtor association dues. As discussed in the NYT piece, our dues (which NAR has automatically received year after year) have subsidized excessive and unnecessary expenditures — at our expense.
Because this was guaranteed revenue, NAR didn’t have to worry about anyone looking over their shoulders or feeling the need to be accountable to its members.
There’s no doubt that being an executive and a volunteer leader requires a significant time commitment. It comes with some compensation. Because NAR is a trade organization, sure, there will be xpenditures on meetings, conferences and lobbying-related activities. But the expenditures highlighted are eye-opening.
Other trade organizations
Prior to starting a career in real estate, I worked in the U.S. Senate and the American Bar Association (ABA), which, like NAR, is also headquartered in Chicago and has a Washington, D.C., office. This is a voluntary trade organization for those who work in the legal profession, and membership is also open to those who are paralegals or citizens with a passion and interest in law.
Working at the intersection of government and a trade association has given me additional context in putting all of this in perspective. I understand the importance of government relations — whether building relationships at a golf course, a private club or a nice restaurant.
Real estate advocacy is critical to our profession, and having the appropriate resources devoted to handling it makes sense.
I also understand the dynamics of association meetings and conferences from my time at the ABA (which had a ton of them going on at any given time). There wasn’t an attorney who didn’t want to have their meeting at a nice resort in a beautiful location or an upscale hotel in a lively city.
However, the ABA was an optional organization for attorneys to become involved in. So, if the members were OK with letting those involved eat cake and then some, so be it.
However, when you are talking about spending money in an organization that members don’t have a choice to belong to, moderation — not excess — should be at the forefront of all decision-making.
Bob’s budget?
Clearly, moderation and fiscal responsibility were not taken into account when it came to NAR’s wallet, as highlighted in the aricle.
Former CEO Bob Goldberg’s salary was an excessive $1.2 million that ended up at $2.6 million a year. Instead of being given $2,250 per month for utilities and insurance to cover Goldberg’s Chicago pied a terre, wouldn’t it have been more prudent to rent something? As far as pet sitters, I can’t even go there. Clearly, his salary would more than cover the cost when needed. When you aren’t paying for it personally, why would you care what it costs?
What about taking Uber, Lyft, taxis or contracting with a car service to transport Goldberg where he needed to go at a negotiated discount? A $1,500-a-month car allowance when not in Chicago all the time seems like an irresponsible use of our money. And were three club memberships truly necessary?
The membership had no say in any of this, and most of us had no idea. Sure, you can look up the disclosures nonprofits have to file to see this, but again, do we really have time to run this information down while we attend to our businesses?
Perhaps the members should have had a say in his compensation, and clearly, a lot of decisions have led us to where we are today.
The same applies to compensation and perks given to NAR elected officers who were deemed as “volunteers.” They were clearly compensated in a manner that was anything but. Seemingly, there was no moral compass on responsible use of the benefits given to them, as evidenced by four-figure Hamilton tickets.
As to luxurious hotel suites in premier hotels, $500 stipends, expensive dinners and bottles of wine — this is blatant gluttony at its finest, with no regard to the optics of how this entire situation translates.
What about the regular agent folk who scrape funds together to attend NAR conferences and foot their own bill for the entire trip? Yes, these events may be tax deductible, but what kind of message does this send to the dues-paying agent staying in a modest hotel while their leadership basks in the lap of unnecessary luxury on the regular agent folk’s dime?
If NAR was a voluntary association and freewheeling spending was accepted by the membership (assuming it was communicated to them), then fine. It’s entirely another issue when we don’t have a voice or a choice in determining what acceptable compensation, perks and benefits are for an association that takes our hard-earned money from us without having to earn our membership.
While the spending was freewheeling, the storm clouds were brewing regarding the issues coming to our industry, and we paid a huge price for that with the floodgates of litigation that have opened beyond Sitzer | Burnett.
Bittersweet
In 2023-2024, we have experienced two years of awakening to bitter realities about NAR, but knowledge is power, so where do we go from here?
With the NAR settlement obtaining final approval, we must continue to hold this organization accountable on numerous levels.
We must not let our guard down because the Department of Justice has made it known that it objects to requiring buyer representation agreements before a buyer can engage an agent to work with them. The DOJ has also stated that this settlement should not protect from future enforcement.
Will NAR truly be able to defend our industry if/when that should happen? If a $418 million settlement, plus all the monies paid out by other brokerages, wasn’t enough, then there likely will never be enough money to satisfy them or any copycat commission lawsuits that may arise from the DOJ’s actions.
Additionally, we must push for the decoupling of NAR, state and local dues. There is some movement on this front, and hopefully this will continue to gain traction. If you want to join NAR, that’s up to you, but we shouldn’t be forced to support an organization that has been irresponsible on so many levels.
Hypocrisy reigns supreme with the “rules for thee, but not for me” mentality. As agents, we have to earn the trust of clients to work with us and, in turn, our paycheck each and every day. The irony is that the NAR hasn’t had to earn our trust or their paycheck.
The Sitzer | Burnett case was about consumer choice and the decoupling of buyer and seller compensation. Where is the agent’s choice in the professional organizations they can belong to? It’s time to dismantle archaic and stringent rules, just like those that went out the door with MLS compensation, which cost our industry millions of dollars.
NAR’s reluctance to decouple their dues from state and local fees is buried in excuses because if they allow this to happen, their guaranteed paycheck to fund their excessive business lifestyle goes away.
With the massive class action settlement, one would think all of that would no longer be feasible, but as long as they have us financially handcuffed, that may keep them able to maintain living the business life to which they’ve become accustomed.
We deserve better
NAR needs to apologize to its members for the irresponsible use of our dollars, refund our dues, allow decoupling, and downsize to a lean and mean organization focused on advocacy. While this may be a unicorn hope, transparency applies to them, not just us, when it comes to the practice changes we have implemented.
A full accounting of how those running the organization are compensated at the level of perks and other benefits should be submitted as a proposal to vote on by the membership every year.
NAR will need to regain the trust of the agent population. Not all agents may return to this organization, but actions over superfluous activities will be the only way to gain members again.
Real estate as we know it has forever changed. Isn’t it time NAR changes with it?
Cara Ameer is a bi-coastal agent licensed in California and Florida with Coldwell Banker. You can follow her on Facebook or on X, formerly known as Twitter.