The Definitive Analysis of Negative Game Changers Emerging in Real Estate or D.A.N.G.E.R report prepared for the National Association of Realtors® (NAR) by author Stefan Swanepoel is blunt in addressing vulnerabilities of the Association itself. Swanepoel is especially critical of NAR's leadership, a criticism he levels at state and local associations as well, but we will summarize his review of NAR as of more general interest.  A discussion of the reports methodology and its critique of brokers and agents is available here.

Swanepoel ranks the 10 dangers to NAR in order of magnitude but it is easier to discuss them in groups (that means that the numbers below won't all be in order) starting with some structural issues with the Association. 

1.      The Decision-Making Structure becomes a Hindrance (PTI=100)

2.      The Three-Tier Structure Liability (PIT=80.0)

Trade associations are very different than other businesses in that they must satisfy more types of constituents across multiple fronts.  NAR is the world's largest trade organization with over a million members, 2,500 of which serve on approximately 80 committees and boards.  Its board of director has 841 voting members.  Decisions made in such an environment are complex and often unclear and NAR is also unique in that it represents both the officers (brokers) and the rank and file (agents.)   

"Leaders desiring to win need to be nimble," and "NAR governance makes it very difficult to respond quickly," Swanepoel says.  He also takes a shot at what he calls "Boomer Generation association groupies" who see serving on boards as a badge of honor and have become hooked on benefits including status and travel.  It is time for NAR to let go of this generation he says.

Another structural problem is its three organizational tiers.  The national, state, and local associations that were formed in a world that "respected status and seniority" and are operating in one that judges them by transparency and accountability.  The state and local associations are somewhat akin to franchises where only certain items are shared and many areas where decision making is not, thus NAR is often blamed for things over which it actually has no control..

6. The Quality/Quantity Challenge (PTI=60.0)

Another related issue arises because NAR tries to be an association for everyone and for only the best.  A membership driven organization has a revenue stream dictated by size so leadership on all levels is often torn between decisions serving the best of its membership and those serving the wishes of the majority, two members with very different needs and wants.  It is time to resolve the confusion over whether NAR should be membership driven or focused on a quality professional membership.

And related to this:

10.  Core Standards are too Low. (PTI=30.0)

New core standards set out for NAR's 1,400 local and state associations cover six specific areas including ethics, advocacy, consumer outreach, obligations to the organization itself, technology and financial solvency.  The author says that the need for minimal standards is vital and the fact they needed to be created indicates that some associations haven't taken their obligations seriously enough.  Establishing the standards is only a first step and should quickly lead to setting benchmarks, monitoring, and accountability.

Two other perceived dangers have to do with the NAR mission:

3.      NAR is being Out Positioned as Industry Spokesperson (PTI=72.0)

4.      Mission Creep (PTI=64.0)

NAR has long prided itself on being "The Voice of Real Estate" for its members, homeowners, and potential homeowners and its research and statistics are widely quoted. In recent years, however, it has had to share that spotlight with several growing brands. Notable in the area of real estate data are CoreLogic, the National Association of Home Builders (NAHB) and Zillow.  In the homeownership area Zillow has taken a large role as an industry voice with smaller roles played by NAHB and Trulia, now about to merge with Zillow.

Over the last decade NAR has introduced more than a half dozen new initiatives such as Top Level Domains and Realtor University and has been no more or less successful than many companies.  The debate is whether such deviation from core roles is a dilution of resources or a progressive strategy. 

5.   The Catch 33- Tech Quandary (PTI=72)

NAR has also widened its mandate to develop several technology initiatives that have then had to battle political headwinds.  The author cites the Realtors Property Resource, a free membership service that has been funded since 2009 to the tune of nearly $100 million while Redfin, offering a similar service has been better funded and is expected to become a billion dollar IPO in the next year. 

NAR does not have the options of a private company to disinvest as many services are free member benefits.  It has also been saddled with the reputation it isn't good a developing technology while at the same time it is criticized for not being aggressive enough in completing with the private sector in the same space.

Finally, the author finds much wrong with both NAR's membership and leadership.

7. Insufficient New Blood (PTI=56.0)

8.  A shortage of Leadership and Talent (48.0)

Real estate is seldom a first career choice and there is no mandatory retirement so agents tend to enter the business late and stay later leading to an increasing median age, now 56 and up five years since 2003.  NAR needs to encourage young people to consider real estate as a career rather than a later in life fallback. 

Likewise leadership is aging and increasingly finds itself overwhelmed and out of touch.  Further the entire organization, from NAR to the smallest brokerages have not planned for a transition to the profit-driven, service-competitive internet-leveraging individuals needed to lead organized real estate. 

The final part of Swanepoel's report focuses on dangers facing the Multiple Listing Systems.  He has some interesting observations there as well and perhaps we will find the time and space to explore them at a later date.