There’s always something to howl about.

The “Very Best” Alternative to the National Association of Realtors

There has been a lot of talk about how to fix the National Association of Realtors or even how to supplant the organization completely.  As an outsider looking in, I have one simply question:  Why are realtors paying good money to an organization that they hate?  As an investor I cannot not think of a more egregious instance of throwing good money after bad money.  I have said more than my fair share of bad things about the NAR and realtors, so I think it is my turn to be solution-oriented.

My solution is simple, instead of working from the bottom up, start top down.  If the best realtors/agents formed their own group, they would instantly dominate whatever market they chose.  Imagine, if you will, that the NAR was made up of only the top 10% of agents in the country.  These agents have a proven sales track record, impeccable ethics, and strong client feedback.  Additionally, the MLS is one of many marketing vehicles they understand and use regularly.  Simply guessing, this group would probably have quicker close rates, achieve better prices for their clients, and have a much better pulse of the direction of the market.

Such a simple idea must have many flaws, so I will start naming a few obvious ones and propose solutions that would seem to work.  Remember, I am on the outside looking in, so feel free to comment if these are way off.  First, the most obvious problem is the MLS access issue.  I think this problem actually solves itself.  Consider how large the listing database would be if the top 10% of the real estate community decided to leave the MLS and start their own listing service.  Additionally, many areas now have a public MLS or many other listing services in addition to the current NAR controlled MLS.  Finally, imagine the hit the MLS would take if the top 10% of the real estate community chose to stop listing with them?  That might open some eyes at the top.

Second, how do you get the top 10% of the real estate community to come to this new organization?  Entice them with cold, hard cash.  Consider certification organizations like ISO or even the CFA.  While these organizations do not guarantee their members more money through membership, it comes with the territory.  ISO certified companies charge customers more because of the implied guarantee of better service.  Members happily pay more because they know they are getting the best of the best.  This is the same with any “best of” membership.  How much more could the top 10% of the real estate community charge?  Maybe 0.5-1%?  Regardless, they would have more customers beating down their door simply because they have proven time and again that they can provide superior service.  This might also have the unintended affect of self-selecting bad customers away from the top 10%.  Let the cheapo customers not willing to pay their agent and inevitably the appropriate price for their home (either buyer or seller), deal with sub par agents.

Third, how do you get the word out about this new organization?  Promote the heck out of it and let the service speak for itself.  Buyers and sellers are hungry for honest agents working in their best interest.  While we may currently have a horrible perception of most realtors, it’s not because we want to.  I, and many of my counterparts, would gladly pay above average rates for a trained professional that could give me great industry analysis and make the transaction go as painless as possible.

Last and most important, how do you determine who gets in the group?  I have been using the top 10% of agents as an arbitrary number, but this group has to truly be select.  It should almost be the opposite of the National Association of Realtors.  This new organization should have hurdle rates that even an average agent could not exceed.  I would propose a mix of number of transactions (note this is very different than number of years in the business), random customer satisfaction surveys, market analysis certification, plus a minimum number of recommendations from their peers.  Think national honor society of real estate agents.

In addition to simply selling real estate, this group could offer classes, lobby for good real estate legislation, and literally change the perception of real estate agents.  I really think real estate is an 80/20 business, with 20% of the agents generating 80% of the sales.  If you sliced off the top 10% or even 20% of agents, you could put together an organization that could literally change the way real estate is sold.

 
More viewpoints, pro and con, on supplanting the NAR:

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