My query is sincere. But first, I want to make a distinction between a REALTOR and a licensed real estate agent. NAR tells consumers to seek the counsel of REALTOR – in fact, make sure they are working with a REALTOR, leading consumers to believe that a licensed real estate agent and REALTOR are synonymous. They are not.
A REALTOR is a licensed real estate agent who is also a member of the National Association of REALTORs, who’s mission is:
The core purpose of the NATIONAL ASSOCIATION OF REALTORS® is to help its members become more profitable and successful.
Clearly absent from the mission is any reference to the consumer.
The vision of the National Association of REALTORS is equally insightful:
The NATIONAL ASSOCIATION OF REALTORS® strives to be the collective force influencing and shaping the real estate industry. It seeks to be the leading advocate of the right to own, use, and transfer real property; the acknowledged leader in developing standards for efficient, effective, and ethical real estate business practices; and valued by highly skilled real estate professionals and viewed by them as crucial to their success.
Working on behalf of America’s property owners, the NATIONAL ASSOCIATION OF REALTORS® provides a facility for professional development, research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system, and the right to own, use, and transfer real property.
I find NARs Vision statement to be interesting. While the concept of advocacy is referenced – It seeks to be the leading advocate of the right to own, use, and transfer real property – NARs advocacy serves first and foremost its members. Again, distinctly absent from the vision statement is a direct reference to the consumer – ultimately the guy or gal who parts with their money to own, use, and transfer real property.
As licensed real estate agents, our behavior is bound and regulated by our state laws, written in the interest of protecting the public from unscrupulous professionals. Licensing is the state’s way to insure that a minimum standard of knowledge and behavior is achieved prior to allowing a licensed real estate agent from practicing his or her profession. Licensing falls outside of the juridiction of NAR, however NAR is actively involved in influencing the standards of real estate practice.
Under license law, we as licensed agents have a fiduciary responsibility to our clients – we are required to do what is in the best fiduciary interest of our client, not our own.
There’s been a great discussion lately here around the issue of transparency and compensation. This issue brought about my question regarding the compatibility of REALTOR and consumer advocacy. In my opinion, transparency is at the very core of consumer advocacy.
Here’s the rub for me. NAR’s final paragraph of its vision statement states:
… research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system, and the right to own, use, and transfer real property.
Ah Yes – preserving the free enterprise system.
Help me undertand – in the interest of defending the free enterprise system – why so much emphasis is placed on defending the current business of how agents get paid? No one to date has provided to me a convincing arguement as to why compensation as a percentage of a sale price is justifiable compensation to a buyer or selling agent?
You’re an expert negotiator? So what. Have you tracked the value you have saved clients over the past 50 transactions? Can you determine the value? Does your client need an expert negotiator in every transaction? If the selling agent did their job correctly, the property your buyer may want to purchase may actually be priced right to begin with – wow, what a concept.
You earn every penny? I’d rather earn every dollar. In fact – I’d like to earn alot of dollars, but perhaps more importantly, I want my clients to understand the real value of my services, not have it buried in a lump percentage of a transaction.
Guess what – your clients should understand how much you earn – and even net – for a transaction. Why? Maybe – as a first step – because you’ll first understand whether or not it is even profitable to serve a certain client or not. I don’t want to make $10 an hour when I can work with other clients and make $150 or even $1,000.
Wake up people – this is a business. In fact, you’re a professional. In order to run a business, you need to make something and sell something – ideally for profit. If not, GM is a fine example of how not to run a business. You make knowledge and experience over time. Unless you learn through osmosis, when you are a newly minted agent, I highly doubt you are worth the same amount as the agent that’s been doing this job in the trenches for several years.
Why as experienced agents do we allow our compensation to be equivalent to those who simply don’t have the same level of experience? Maybe they can better articulate their value. If they can’t – is this in the fiduciary interest of our clients?
Oh – I forgot – we’re upholding free enterprise.
Why are you carrying inventory you can’t sell? Ask GM how that’s working out for them. If you’re clients think you are working for free it’s time to tell them otherwise. If you typically make $150/hour working with buyers – tell them. If you make more, I’d tell that too.
So my last question is this:
Will that be a tall, grande or venti?
Cathleen Collins says:
Great question, Tom. And fine job dissecting the NAR mission and vision statements.
June 5, 2009 — 7:05 pm
Thomas Hall says:
Thanks Cathleen – I’ve been thinking alot about John Rowles comment regarding why we can’t build our own organization. Seems to make more and more sense everyday.
June 6, 2009 — 9:06 am