WASHINGTON — Two years after the National Association of Realtors (NAR) adopted tougher service standards for Realtor associations, the 1.2 million-member trade group is again upping the ante.
Today, the nearly 800-member NAR board of directors voted to add more requirements to its “core standards” for associations in an effort to “ensure high-quality information and services for all Realtors” and “raise the bar” for Realtor associations.
Why raise core standards?
The policy amendments approved today mandate that every year, associations must offer:
- Six more political advocacy activities
- At least one professional development opportunity for members
- At least one Realtor safety activity
- Leadership development and training for their elected Realtor leaders
- Policies governing performance reviews for chief paid staff
- And other changes
The NAR board originally enacted the core standards to ensure even the smallest association is capable of enforcing the Realtor Code of Ethics, playing a political advocacy role, conducting outreach to consumers, maintaining fiscal responsibility, and operating a website promoting member programs, products, and services.
The core standards have been a driving force in nearly 200 local Realtor association mergers. More are likely to join forces after today’s vote.
Mergers — funds and status
To facilitate those mergers, the NAR board today approved an extension of up to $625,000 in grant funds. That extension will be limited to the first 25 merged associations starting July 1, which will be funded at a rate of $25 per Realtor member with a range of $15,000 to $25,000 per merger.
When the NAR board approved the core standards in May 2014, there were 1,355 local associations. As of mid-February 2016, that figure was down 11 percent, to 1,204 local associations. This was largely due to 85 mergers involving 194 associations, 108 of which voluntarily surrendered their NAR charters, according to a NAR committee work group report.
Another 27 local associations voluntarily dissolved without merging, and 16 had their charters revoked for noncompliance with the standards, the report said.
The trade group appears to be well on its way to one state association executive’s prediction of 1,000 local associations by 2024.
The changes — in depth
Here are the changes to the core standards approved by the NAR board today:
- The annual compliance cycle will now be the calendar year so that instead of complying by June 30 every year, local associations will have to comply by December 31 every year. To facilitate the transition, the third cycle will be 18 months, beginning July 1, 2016 and ending December 31, 2017.
- In addition to the advocacy requirements already included in the original core standards, associations must support the “Vote-Act-Invest” goals of NAR’s political advocacy program, the Realtor Party.
This requires associations to “annually conduct at least two initiatives or activities furthering or supporting each of those three goals respectively.” That bumps up the number of advocacy activities required from two to eight.
Examples of initiatives and activities satisfying this requirement include voter registration promotion, meeting with elected officials, consumer mobilization for advocacy, and hosting candidate fundraisers. Other examples can be found at www.realtoractioncenter.com/resourceguide. - Associations will still be required to conduct a minimum of four consumer outreach activities per year, but the standards now specify that two of these activities must demonstrate how the association is “The Voice for Real Estate” in its market (such as promoting market statistics) and two activities must demonstrate the association’s involvement and investment in the community (such as fundraising for a local charity).
- Local and state association chief staff must still complete at least six hours of Realtor association professional development every year, but in associations without paid or salaried staff, this requirement applies to the person primarily responsible for performing the functions ordinarily carried out by paid staff in other associations.
- Associations must now offer, promote or provide at least one professional development opportunity for their members every year.
- Associations must certify that they have conducted an activity promoting Realtor safety every year.
- Associations must annually provide resources for or access to leadership development education and training for their elected Realtor leaders, and document the training, tools, programs, and resources they offer or provide access to.
- Associations with paid staff must adopt policies and procedures for conducting annual performance reviews of their chief paid staff, and must annually certify that such a review was conducted.
- The requirement that associations must have and adopt a business or strategic plan has been expanded to specify that every association must annually certify that its board of directors has reviewed and discussed the association’s plan and that the plan includes an advocacy component and a consumer outreach component. Those components must have “actionable implementation strategies.”
- As before, all associations with revenue of $50,000 or more must annually submit a report from a certified public accountant which includes either an audit opinion or an accountant’s review report.
For associations with annual revenues of less than $50,000, a compilation report prepared by a CPA will still be acceptable. But now MLS-generated revenues and revenue from other business subsidiaries must be included in the calculation of whether an association has annual revenues of less than $50,000.
- The noncompliance appeal hearing process for the core standards was changed to mandate that, as of July 1, local associations must submit their compliance information by December 31 every year and state associations must certify their local associations’ compliance status by January 30 every year.
Local associations whose state association has recommended revocation of their Realtor charter for noncompliance have until February 28 to submit a written challenge to NAR.
If a hearing panel determines that an association is “substantially compliant” with the standards, the panel may grant an extension until April 30.
If the hearing panel determines the association has not complied by then, the decision will be reported directed to the NAR board in May.
The charter revocation will be effective immediately following the board’s approval at NAR’s midyear conference.
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