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National Association of Realtors

(Redirected from National Association of Real Estate Boards)

The National Association of Realtors (NAR) is an American trade association[4] for those who work in the real estate industry. As of December 2023, it had over 1.5 million members,[5] making it the largest trade association in the United States[6] including NAR's institutes, societies, and councils, involved in all aspects of the residential and commercial real estate industries. The organization holds a U.S. trademark over the term "Realtor".[7] NAR also functions as a self-regulatory organization for real estate brokerage. The organization is headquartered in Chicago.

National Association of Realtors
FormationMay 8, 1907 (117 years ago) (1907-05-08)
36-1520690
Legal status501(c)(5)
Headquarters430 North Michigan Avenue
Chicago, Illinois, U.S.
Membership
Over 1.5 million [1]
President
Kevin Sears[2]
CEO
Nykia Wright[3]
Websitewww.nar.realtor

Overview

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National Association of Realtors building on New Jersey Ave, NW, Washington DC

The National Association of Realtors was founded on May 12, 1908 as the National Association of Real Estate Exchanges in Chicago, Illinois.[8][9] In 1916, it changed its name to The National Association of Real Estate Boards (NAREB).[8][9] The current name was adopted in 1972.[8][9]

NAR's members are residential and commercial real estate brokers, real estate salespeople, immovable property managers, appraisers, counselors, and others engaged in all aspects of the real estate (immovable property) industry, where a state license to practice is required. Members belong to one or more of some 1,600 local realtor boards or associations. They are pledged to a code of ethics and standards of practice, a version of which was first adopted in 1913.[10]

NAR and Multiple Listing Service (MLS) systems

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The NAR governs the hundreds of local Multiple Listing Services (MLSs) which are the information exchanges used across the nation by real estate brokers. (However, many MLSs are independent of NAR, although membership is typically limited to licensed brokers and their agents; MLSPIN[11] is an example of one of the larger independent MLSs in North America.)

Through a complicated arrangement, NAR sets the policies for most of the Multiple Listings Services, and in the late 1990s, with the growth of the Internet, NAR evolved regulations allowing Internet Data Exchanges (IDX) whereby brokers would allow a portion of their data to be seen on the Internet via brokers' or agents' websites and Virtual Office Websites (VOW) which required potential buyers to register to obtain information.

These policies allowed participants—whether they were individual one-person brokers or large regional companies—to limit access to some or all of the MLS data by individual brokers (whether they were brokers operating solely on the Internet or local competitors). In 2005, this prompted the Department of Justice to file an antitrust lawsuit against NAR alleging its MLS rules regarding these types of limitations on the display of data were the product of a conspiracy to restrain trade by excluding brokers who used the Internet to operate differently from traditional brick-and-mortar brokers. (For a description of the DOJ action, see Antitrust Case filings for U.S. vs. National Association of Realtors.[12]) Meanwhile, various real estate trends such as expanded consumer access and the Internet are consolidating existing local MLS organizations into larger and more statewide or regional MLS systems, such as in California and Virginia/Maryland/Washington, D.C.'s Metropolitan Regional Information Systems.

In response to the case, NAR had proposed setting up a single Internet Listing Display system which would not allow participants to exclude individual brokers (whether of a bricks-and-mortar type or solely internet-based) but require a blanket opting out of display on all other brokers' sites.[citation needed] This system became the IDX system. Although IDX allows the public to view MLS listings, it still requires the listing brokerage information to be placed on the listing every place it appears (brokers legally "own" the listings of their brokerage), to prevent misrepresentation of the listing information, and to place accountability for the information on the broker as the law dictates.

The antitrust lawsuit was settled in May 2008.[13] The settlement agreement mandated that all Multiple Listing Service systems allow access to Internet-based competitors.[13][14] It required NAR to treat online brokers the same as traditional brokers and barred NAR from excluding online brokers from membership because they do not have a traditional business model.[15] The NAR admitted no wrongdoing, and it paid neither fines nor damages as part of the deal.[15] A federal judge formally approved the settlement in November 2008.[16][17] NAR's general counsel believed that the settlement would not affect commissions paid by the general public, but a business professor at Western Michigan University predicted that the increased competition would cause a 25 to 50 percent decrease in commissions.[15]

Another major anti-competitive practice is supported (indirectly) by various state laws which prohibit the "sharing" of commissions with unlicensed individuals. In broad interpretations, this is deemed to prevent a buyers' agent from providing credit to his or her buyers from commissions received. Currently, there are 10 states where real estate agents and brokers are barred from offering homebuyers or sellers cash rebates or gifts of any kind with a cash value of more than $25. Various realtors in such states have successfully contested this interpretation in states which now allow the practice (notably, Patrick Lea, a realtor in Ohio, and numerous agents in Kentucky). The Kentucky case was ultimately tried with the United States Department of Justice as the plaintiff and the Kentucky Real Estate Commission as the defendant.[18]

In 2019, The National Association of Realtors’ board approved the Clear Cooperation Policy. A policy that requires brokers to submit a listing to the Multiple Listings Service within one business day of marketing a property to the public.[19]

Lobbying

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The National Association of Realtors is considered one of the most powerful special interests in the United States.[20][21][22] In 2023, the organization spent $52 million on lobbying, ranking second on the OpenSecrets list of top spenders.[23] It has spent a total of $850 million on lobbying since 1998.[24]

The Real Estate Political Education Committee (REPEC), a political action committee, was formed in 1969 for the purpose of electing Realtor-friendly candidates.[25] It was renamed the Realtors Political Action Committee (RPAC) in 1974 following changes to federal election law.[26] RPAC now claims to be the largest trade association PAC in the country and gives around $4 million per year to candidates who support real estate interests.[27][28]

Role in housing segregation

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Between 1924 and 1950, the Realtor Code of Ethics included explicit references to racial segregation.[29][30] Realtors were prohibited from helping Black homebuyers move into white neighborhoods and faced career-ending penalties for not complying.[31][32] The clause encouraging segregation was not fully removed from the Realtor Code of Ethics until 1974.[33][34]

The National Association of Realtors opposed the Fair Housing Act in 1968, which outlawed racial discrimination in home sales.[35][34]

Enabling the subprime mortgage crisis

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U.S. Median Price of Homes Sold

Some experts[36] believe that brokers and realtors bear at least partial responsibility for the subprime mortgage crisis, purposefully inflating the perceived market values of homes, and subsequently encouraging buyers to take out larger mortgages than needed. The theory is that collusion with mortgage lenders enabled realtors to earn high volumes of commission on borrowed money for inflated house values with no risk to the realtors. Many victims[who?] feel that home buyers were tricked into taking out larger loans to buy more expensive homes, and the higher sales prices paid the realtors higher commissions. This practice[clarification needed] is not considered "unethical" by the NAR which claims to be a Self-regulatory organization; however, obvious implications[clarification needed] show extensive and substantial harm rendered to the public. Many victims are encouraging the Securities and Exchange Commission to begin aggressively regulating[37] agents and refunding overpayments to homebuyers.

Antitrust lawsuits

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In 2005, the United States Department of Justice filed a formal complaint against the National Association of Realtors for violating Section 4 of the Sherman Antitrust Act.[38][39] The complaint sought to enjoin the National Association of Realtors "from maintaining or enforcing a policy that restrains competition from brokers who use the Internet to more efficiently and cost effectively serve home sellers and buyers, and from adopting other related anticompetitive rules.[38]

The DOJ challenged NAR's MLS rules that inhibited competition from Internet-based brokers.[38][17] On November 18, 2008, the Court entered a Final Judgment approving a settlement against NAR.[17] Under the Final Judgment, the NAR agreed to the policies challenged by the United States and replaced those policies with rules that do not discriminate against brokers who use the Internet to provide low-priced brokerage services to consumers.[38][17][40]

In 2012, American Home Realty Network, Inc., the operator of NeighborCity, filed antitrust counterclaims in response to a pair of copyright lawsuits, alleging that the "copyright lawsuits filed against it by two multiple listing services with financial backing from the National Association of Realtors are part of a concerted effort by NAR to drive the company out of business and eliminate it as a provider of services to real estate brokers."[41] The counter-claims also allege that the copyrights asserted were never properly registered.[41][42] In the Minnesota case, which recites claims against the NAR but does not directly name the NAR as a counter-defendant, AHRN filed a second amended counterclaim adding Edina Realty and Home Services of America as Counter-Defendants in the antitrust and unfair competition claims.[43] Edina Realty is a subsidiary of HomeServices of America, Inc., a Berkshire Hathaway company, which owns real estate brokerage firms in states across the country, including Minnesota, Maryland, North Carolina, Georgia, Washington, Oregon, Arizona, Rhode Island, Connecticut, Iowa, Nebraska, Ohio, Illinois, Kansas, South Carolina, Missouri, Pennsylvania, Indiana, Kentucky, Alabama, and California.[41][43][44][45][46] Earlier in 2012, the mid-Atlantic multiple listing service Metropolitan Regional Information Systems, Inc. (MRIS) and St. Paul, MN-based Regional Multiple Listing Service of Minnesota Inc. (NorthstarMLS) filed copyright claims against NeighborCity.[41][42] The National Association of Realtors said it would provide financial support for NorthstarMLS and MRIS legal expenses.[45][47]

Another lawsuit was filed in March 2019 challenging NAR's compensation policies which require all member brokers demand blanket, non-negotiable buyer-side commission fees when listing a home on a Multiple Listing Service (MLS).[48][49]

Burnett et al v. National Association of Realtors et al

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Main article: Burnett v. National Association of Realtors

On October 31, 2023, a federal civil jury found that the NAR had conspired to inflate commissions paid to home-buyers' real estate agents, and determined that NAR and its codefendants owed damages of almost US$1.8 billion.[50][51] The lawsuit, Burnett et al v. National Association of Realtors et al, was heard in the U.S. District Court for the Western District of Missouri in Kansas City, and involved allegations of violations of federal and state antitrust laws by the NAR, HomeServices of America, Keller Williams Realty, Anywhere Real Estate (parent of Coldwell Banker, Century 21 Real Estate, and Sotheby's International Realty) and Re/Max.[50][51][52] Anywhere and Re/Max had previously settled their liability and agreed to pay lesser damages, leaving NAR, HomeServices and Keller Williams to defend the suit at trial.[50][51] Upon announcement of the verdict and before final judgment was entered, NAR and HomeServices stated their intention to appeal, and Keller Williams was considering doing so.[50][51][53] In March 2024, NAR agreed to settle for a reduction of damages to US$418 million, eliminating its rules on commissions, and waiving its right to appeal.[54] As a result of the settlement, starting August 2024, buyers’ agents commission fees are not allowed to be advertised and buyers must sign a contract with their agent before seeing properties together.[55] The Wall Street Journal reported the settlement is expected to reduce real estate commissions, force some agents out of the industry, and lead to a decline in NAR’s membership.[56]

Specializations

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NAR educational requirements and recognized designations

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Realtors, as members of NAR, also have the option of studying for additional certifications in a variety of specialties, several of which are backed by NAR with offerings of certification and update courses available nationwide.[57]

Consumer outreach

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The NAR launched HouseLogic.com in February 2010 in an attempt to reach consumers directly for the first time.[58]

Other national real estate associations

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See also

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References

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  1. ^ "About NAR". National Association of Realtors. 15 November 2012. Retrieved August 29, 2023.
  2. ^ "Leadership Team". National Association of Realtors. 8 January 2024. Retrieved January 8, 2024.
  3. ^ "Leadership Team". National Association of Realtors. 18 August 2024. Retrieved August 26, 2024.
  4. ^ National Trade and Professional Associations (2008), 43rd ed., ISBN 978-1-880873-56-4
  5. ^ "Historic Report", National Association of Realtors website, 2023, archived from the original on 2024-01-10, retrieved 2024-01-10
  6. ^ "The National Association of Realtors (NAR) is the biggest trade association in the U.S., with more than one million members". corporatefinanceinstitute.com. Retrieved 2022-06-16.
  7. ^ "A Realtor by any other name is still a Realtor, or a REALTOR, no matter how you say it". The Oklahoman. Retrieved 2023-08-30.
  8. ^ a b c McMillin, David (18 July 2022), "What Is NAR (National Association of Realtors)?", Bankrate, archived from the original on 2022-07-19, retrieved 2023-07-28
  9. ^ a b c "History", National Association of Realtors website, 13 January 2012, archived from the original on 2024-04-04, retrieved 2024-04-09
  10. ^ "The Code of Ethics", National Association of Realtors website, 2018-03-07, archived from the original on 2024-04-09, retrieved 2019-04-11
  11. ^ "Welcome to MLS PIN - Connecting Real Estate Professionals". mlspin.com. Retrieved 2019-04-11.
  12. ^ United States v. National Association of Realtors. United States District Court for the Northern District of Illinois, Eastern Division. 2008-05-27. Retrieved 2008-05-27.
  13. ^ a b Bartz, Diane. Realtors to open listings to settle lawsuit. Reuters. 2008-05-27. Retrieved 2008-05-27.
  14. ^ Jordan, Lara Jakes. Settlement opens listings to online real estate agents. Associated Press. The Mercury News, Silicon Valley. 2008-05-27. Retrieved 2008-05-27.
  15. ^ a b c Lichtblau, Eric. Realtors Agree to Stop Blocking Web Listings. The New York Times. 2008-05-28. Retrieved 2008-05-27.
  16. ^ "Judge locks in DOJ v. NAR settlement". Inman. Retrieved 2024-03-24.
  17. ^ a b c d "United States v. Consolidated Multiple Listing Service, Inc". US Department of Justice. Retrieved 19 April 2013.
  18. ^ "Competitive Impact Statement: U.S. v. Kentucky Real Estate Commission". United States District Court for the Western District of Kentucky. 26 July 2005.
  19. ^ "NAR approves pocket listings killer". The Real Deal Los Angeles. 2019-11-11. Retrieved 2019-11-11.
  20. ^ Justice, Glen (2006-01-12). "Lobbying to Sell Your House". The New York Times. Archived from the original on 2018-02-12. Retrieved 2024-04-08.
  21. ^ Kusisto, Laura; Friedman, Nicole (2024-03-15). "Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes". The Wall Street Journal. Archived from the original on 2024-03-15. Retrieved 2024-04-08.
  22. ^ Finley, Allysia (2024-04-05). "The Realtors Still Need Market Reform". The Wall Street Journal. Archived from the original on 2024-04-05. Retrieved 2024-04-08.
  23. ^ "Top Spenders". OpenSecrets. Archived from the original on 2024-02-25. Retrieved 2024-04-08.
  24. ^ "National Assn of Realtors". OpenSecrets. Archived from the original on 2024-04-09. Retrieved 2024-04-09.
  25. ^ "History". realtorparty.realtor. Archived from the original on 2024-04-09. Retrieved 2024-04-09.
  26. ^ "REALTORS® Political Action Committee (RPAC) Research Guide" (PDF). nar.realtor. Archived (PDF) from the original on 2024-04-09. Retrieved 2024-04-09.
  27. ^ Capuzzo, Jill P. (2021-03-26). "Talk Politics? Some Brokers Are Only Too Happy to Do So". The New York Times. Archived from the original on 2021-03-26. Retrieved 2024-04-09.
  28. ^ "Top PACs". OpenSecrets. Archived from the original on 2024-04-09. Retrieved 2024-04-09.
  29. ^ "Code of Ethics of the National Association of Real Estate Boards (1924)" (PDF).
  30. ^ "Realtors were once REQUIRED to discriminate". Inman. Retrieved 2024-04-08.
  31. ^ Rothstein, Richard (2018). The color of law: a forgotten history of how our government segregated America (First published as a Liveright paperback 2018 ed.). New York London: Liveright Publishing Corporation, a division of W.W. Norton & Company. p. 62. ISBN 978-1-63149-453-6.
  32. ^ Taylor, Keeanga-Yamahtta (2019). Race for profit: how banks and the real estate industry undermined black homeownership. Justice, power, and politics. Chapel Hill: The University of North Carolina Press. p. 259. ISBN 978-1-4696-5366-2.
  33. ^ "An Apology From the National Association of REALTORS®". www.nar.realtor. 2020-11-19. Retrieved 2024-04-08.
  34. ^ a b "The National Association of Realtors Is Sorry About All the Discrimination". Bloomberg.com. 2021-12-21. Retrieved 2024-04-08.
  35. ^ "NAR President Charlie Oppler Apologizes for Past Policies that Contributed to Racial Inequality". www.nar.realtor. 2020-11-19. Retrieved 2024-04-09.
  36. ^ "The Subprime Blame Game: Where Were the Realtors?". Knowledge@Wharton. Wharton University of Pennsylvania. October 17, 2007. Retrieved December 3, 2012.
  37. ^ "Is it time to regulate real estate agents?". January 12, 2009.
  38. ^ a b c d "United States District Court for the Northern District of Illinois Eastern Division". US Justice Department. Retrieved 19 April 2013.
  39. ^ "Justice Department Sues National Association of Realtors for Limiting Competition Among Real Estate Brokers". US Department of Justice. Archived from the original on 14 January 2013. Retrieved 19 April 2013.
  40. ^ "United States District Court for the Northern District of Illinois Eastern Division". US Department of Justice. Retrieved 19 April 2013.
  41. ^ a b c d Brambila, Andrea. "NAR, MRIS hit with antitrust suit". Inman. Retrieved 19 April 2013.
  42. ^ a b "Fight Over Real Estate Listings Escalates As NeighborCity Counters Copyright Claims With Antitrust Accusations". Techdirt. 11 October 2012. Retrieved 19 April 2013.
  43. ^ a b "In the United States District Court for the District of Maryland Greenbelt Division" (PDF). Inman. Retrieved 19 April 2013.
  44. ^ Fuller, Matt. "Neighborcity.com alleges NAR, MRIS, NorthstarMLS violate anti-trust laws: op/ed". AG Beat. Retrieved 19 April 2013.
  45. ^ a b "MLS says no thanks to NAR funds for MRIS v. NeighborCity". Aim Group. Retrieved 19 April 2013.
  46. ^ "HomeServices of America, Inc. Announces Acquisition of Prudential Georgia Realty". BHHS Georgia. Home Services. March 19, 2013. Retrieved 19 April 2013.
  47. ^ Brambila, Andrea. "NAR helping MLSs cover costs of NeighborCity copyright suits". Inman. Retrieved 19 April 2013.
  48. ^ Yale, Aly J. "Lawsuit Alleges Collusion, Inflated Commissions Among Realtors". Forbes. Retrieved 2022-03-07.
  49. ^ "Real-Estate Commissions Antitrust | Hagens Berman". www.hbsslaw.com. 6 March 2019. Retrieved 2022-03-07.
  50. ^ a b c d Kamin, Debra (2023-10-31), "Home Sellers Win $1.8 Billion After Jury Finds Conspiracy Among Realtors", The New York Times website, archived from the original on 2023-10-31, A federal jury ruled on Tuesday that the powerful National Association of Realtors and several large brokerages had conspired to artificially inflate the commissions paid to real estate agents, a decision that could radically alter the home-buying process in the United States.
  51. ^ a b c d Knutson, Jacob (2023-10-31), "Federal jury verdict on broker fees rocks real estate industry", Axios, Representatives for the NAR and HomeServices of America said they planned to appeal the verdict, while a spokesperson for Keller Williams said the company would consider appealing.
  52. ^ "Burnett et al v. National Association of Realtors et al", United States District Court for the Western District of Missouri website, archived from the original on 2023-10-31
  53. ^ Kusisto, Laura; Friedman, Nicole (February 16, 2024). "Realtors Are in Crisis—and Home Buyers Could Be the Winners". The Wall Street Journal.
  54. ^ Kamin, Debra (15 March 2024). "Powerful Realtor Group Agrees to Slash Commissions to Settle Lawsuits". The New York Times.
  55. ^ Delouya, Samantha (2024-08-17). "The NAR settlement comes into effect today: Here's what changing and why | CNN Business". CNN. Retrieved 2024-10-25.
  56. ^ Friedman, Laura Kusisto and Nicole. "Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes". WSJ. Retrieved 2024-03-16.
  57. ^ NAR Accredited Designations & Courses. National Association of Realtors.
  58. ^ Scene, Local (2010-02-26). "Realtors looking for special bond with consumers". Chicago Tribune.
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