NAR Lawsuit Part IX: Reimagining Real Estate Agents as Business Consultants Moving Forward in the 21st Century

Introduction: A Call for Independence 🗽

The National Association of REALTORS® (NAR) is the largest trade organization in the country, dominating the marketplace as a thought leader, trendsetter, educator, and yes, enforcer. In their realm, every idea, process, rule, system, and strategy becomes almost law-like. Despite their non-governmental status, the authoritative manner in which state associations and realtor boards operate might lead one to think otherwise due to their ability to discipline and fine agents, or to suspend or terminate memberships and refer agents to the department of real estate for certain behaviors. The enforcement of rules and practices is necessary to support their brand and maintain a high level of professionalism in the real estate profession. However, the current litigation is an indication that they may have gone too far, operating more like a for-profit business with customers than a mere trade organization with members.

The Question of Necessity ❓

Do we need NAR or any Real Estate Trade Association? Can a person operate in the real estate profession without being under such oversight and influence? I believe the answer is yes. Independent operation is entirely feasible today. There are many real estate trade organizations, but membership is not mandatory. NAR is the largest, but it is just one of many. These organizations can provide value when they focus on educating and supporting their members’ businesses—their primary objective. Membership comes with rules, fees, and other obligations. However, if you prefer not to be bound by these constraints, an appealing alternative exists: become an independent business consultant. This role allows you to assist clients in purchasing or selling real estate or any business aspect based on your knowledge and expertise, and to be compensated at an hourly rate you set.

Addressing Concerns Over Professionalism 🛠️

In Part VIII, I argued that all Real Estate Agents and Brokers should become business consultants. The primary concern from those entrenched in real estate associations is about the behavior of poorly trained and unprofessional agents. Yes, illegal and unethical behavior is a problem, but it’s not limited to real estate—bad actors exist in all professions. The main concern for associations is the potential loss of membership revenue.

Regulatory Adaptation Needed 🔧

Shifting towards Real Estate Consultants would require regulatory and licensing frameworks to adapt, but perhaps not as radically as one might initially think. Core ethical and professional standards would still apply, ensuring advisors operate with integrity and in the best interests of their clients. However, the specifics of licensure and regulation would shift to emphasize competency in market analysis, financial advising, and strategic planning, rather than just transactional procedures. Real advisors are not involved in the tactical or procedural aspects of transactions—they provide knowledge, address issues, and help find solutions.

The Role of Ancillary Services 🌐

The array of ancillary services in real estate transactions—such as escrow, title inspections, and attorneys—underscores the interdisciplinary nature of real estate and the opportunity for advisors to serve as orchestrators. This role requires a broad understanding of the process and a network of trusted professionals.

Compensation Models for Consultants 💰

Compensation for real estate advisors could be structured around consulting fees for services rendered, rather than commissions based on the sale price of properties. This model aligns compensation with the value of the advice and services provided and allows for transparent pricing for consumers. While commissions could still be negotiated if goals are exceeded, most advisors, including myself, would avoid this consumer trap. We should be compensated for our time and expertise, not for transaction outcomes.

Demonstrating Value and Expertise 🌟

Transitioning to this model requires real estate professionals to clearly articulate and demonstrate their value, focusing on their analytical capabilities, market insights, and strategic advice. Success in this role hinges on an advisor’s ability to provide actionable intelligence that empowers clients to make informed decisions, whether they’re buying, selling, or investing in real estate. This means you must be well-educated and credentialed, with certifications, designations, and third-party validations that underscore your expertise. Building a portfolio of testimonials, social proofs, publications, and speaking engagements can also significantly enhance your visibility and credibility.

Ethics and Oversight ⚖️

While concerns about ethics and illegal activity are valid, it’s crucial to recognize that the current licensing and oversight mechanisms are more aspirational than effective in curbing bad behavior. Real change in protecting consumers and ensuring ethical behavior in real estate may not come from more regulation but from a shift in how the industry structures itself.

Closing Thoughts 🎯

The profession of real estate is broad and complex, demanding specialization and in-depth knowledge. By embracing a shift to business consultancy, real estate professionals can ensure their relevance and success in a rapidly evolving market. The real challenge isn’t just in changing how we are paid, but in how we redefine our roles to provide true value in the 21st century.

Looking Ahead 🔮

But, and there is always a but, how do we establish trust and credibility in this new model? I know this blog is already long, but stay tuned for Part X, where we will explore these mechanisms in detail.

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