Realtor association mergers are sometimes controversial. But Inman’s latest special report found that more real estate agents and brokers think they’d be good for business than not.
In a survey fielded earlier this year, Inman readers were asked if they would like their local Realtor association to merge with another local association.
The biggest share of respondents — more than 4 in 10 — said “yes.” Just over 3 in 10 do not want their association to merge with another, though some of these respondents said they would prefer their MLS merge with a neighboring MLS.
The rest, 26 percent of respondents, said they didn’t know if they would like their association to merge.
Broker-owners and managing brokers tended to be in the “yes” camp, while agents tended to be in the “no” or “I don’t know” camps.
Read our full special report on association services
NAR merger grants
In May, the board of directors of the National Association of Realtors approved an extension of grants to assist local associations who choose to merge in order to be able to offer the services required under NAR’s “core standards.”
The standards were meant to ensure that even the smallest association was capable of offering a minimum set of services, including enforcing the Realtor Code of Ethics, playing a political advocacy role, conducting outreach to consumers, maintaining fiscal responsibility and leveraging technology.
In May, NAR’s board added even more requirements to the core standards.
When NAR’s board first adopted the standards in May 2014, the board allocated up to $20 million in funding to help associations comply, including through facilitating mergers. NAR expended $1.4 million of those funds in 2014 and $5.1 million in 2015.
The board extended the planned June 30, 2016 sunset of merger grants to December 31, 2017. The extension is limited to the first 25 combined associations that merge starting July 1, 2016. The grants will be funded at a rate of $25 per Realtor member with a range of $15,000 to $25,000 per merger. The extension is only for up to $625,000 in grant funds.
The core standards have been a driving force in association mergers and dissolutions. NAR’s local association count fell from 1,355 in May 2014 to 1,204 as of February 2016 — an 11 percent decline.
Inman’s survey results indicate that Realtors would like to see even more mergers, citing the possibility of better services and reduced fees, among other reasons.
The ‘yes’ camp
When asked why they’d like their association to merge with another, respondents cited economies of scale; increased efficiency; access to better leaders, training and tools; fewer disparate rules; fewer “fiefdoms;” fewer duplication of services; and the ability to access more listings in a given market.
Of those who said “yes” to association mergers, 42 percent were broker-owners or managing brokers, 29 percent were broker associates, and 26 percent were agents.
Sample responses:
- “A state, regional or national MLS could provide services at lower costs.”
- “Because we have to enter data multiple times to reach our full market — redundancy is non-productive.”
- “Benefit to access listings regionally.”
- “So we would have better leadership and access to more tools and training.”
- “Greater reach and opportunities for our members.”
- “Hawaii Island Realtors and West Hawaii Association of Realtors are on the same island/county and duplicate services. They should merge to offer more quality.”
- “Localized limitations are outdated and ineffective.”
- “We need to consider opportunities to grow and increase our regional exposure.”
- “Simplify and lower the fees.”
- “I think there needs to be just a STATE association and a State MLS.”
- “Too many associations in region is inefficient and they spend more time worrying about competing with others instead of improving the business. Larger association able to provide more resources.”
- “Our dues are high and we have always had a local association we could be proud of. I don’t think our local association is relevant any longer, and in fact are holding us back because of their ‘fear’ of loss of control. What control? We lost that years ago.”
- “We crossover so much and we have a common MLS. Maybe dues could get reduced.”
- “Mine recently merged (Oakland and Berkeley). Economies of scale are great. We need more.”
- “Keeps costs down with economy of scale and eliminates turf wars”
- “We get a state license, which for better or worse, enables us to practice real estate in the entire state. It seems like there are way too many power fiefdoms established over the long-term which do more to serve the fiefdoms than to service the members. One state – one lockbox – one power website – one MLS = lower dues, less bureaucracy and more member empowerment.”
- “Just gives better access to each other’s listings. Many Realtors do not subscribe to the bigger MLS and so we don’t see many listings that are in our area.”
- “Would like smaller ones to merge with mine. All same lockboxes and MLS and ability to cover larger area for sales.”
- “I would like to have one Realtor association throughout [New Jersey], as we already have. Each little ‘fiefdom’ sees things slightly differently and charges different fees. If there were just one association with branch offices, not individual associations, our annual cost would be considerably lower.”
- “The larger the community the better chance of finding leads.”
- “I believe the associations should have to compete for our business. There is NO competition in this space and we are forced to pay what they say we owe, with providing very little in return.”
- “It would make a more powerful organization.”
- “Our dues are among the highest in the state and much of that money goes to pay staff, rent, etc. Creating a state association with district offices should be able to accomplish the same services as having redundant local associations.”
- “We have three associations in our county and one is now suing the other two. This is a huge waste of time and money.”
- “Strength in numbers and better cooperation with a shared culture.”
- “Very close in geography, same clientele.”
- “We are the largest in the area (but still only about 1,700 members). We still have a few close with 100 or less members. Seems we’d all be better combined. Shared access to databases, programs, cooperation. Many outsiders come to show our property without access to homes, forms, etc. Just harder to do business.”
- “Economies of scale, savings, consolidated regional political advocacy.”
- “Silly to have so many different associations, though the protectionism is difficult to pierce.”
- “Bad business to have multiple associations providing [the] same services with overlapping and duplicating cost. Crazy!!”
- “There are several other smaller local associations in my marketplace and we have association of choice. This makes it a competitive scenario which sometimes can be good to keep them adding value. However, I feel that these smaller associations are unnecessary and if they merged with the larger one/ones we would likely all benefit from a larger scale with potentially reduced fees. Also, it would eliminate the dark side of competition among them and also the variations in rules. It’s really all too much to try to keep a handle on.”
- “Too many inefficient fiefdoms.”
- “I’d prefer to only belong to one. It causes issues with buyer searches and seller representation if you cannot cover the whole geographic area without belonging to more than one.”
- “I work in areas that have multiple small and MLS associations and they each require membership but they are on different MLS services. They also each require me as a managing broker to pay fees for agents that don’t use their systems. Pretty ridiculous!”
The ‘no’ camp
Just over 3 in 10 respondents were not in favor of their local association merging, however. They cited their “unique” market and the need for expertise in specialty markets; geographic distance from other associations; increased costs; and a loss of attention to local interests with a bigger association. Some said multiple listing services, not associations, should merge.
Of those who said “no” to association mergers, 46 percent were agents, 26 percent were broker associates, and 23 percent were broker-owners or managing brokers.
Sample responses:
- “Distance from other boards.”
- “Our area is very unique and we enjoy our autonomy.”
- “Don’t see the need. Would much prefer the two MLS systems would merge.”
- “The surrounding associations are inferior.”
- “I do not see any benefit to merging. Outside of MLS access, the state association provides more benefits than the local association. I see no advantages to combining [the local] association with the nearest neighboring association. The geographical distance in area would encourage members to sell properties outside of their areas of expertise. With my association having a large area of waterfront luxury homes, second homes, and vacation homes and the neighboring association being a primary residential market it would be feasible to believe new members would be more likely to cross over to the waterfront properties. These waterfront properties have specific set backs and governance that is not found in the traditional market.”
- “Small market. What I’d like to see is all of the local associations across the state unify the forms suite. EVERY local association uses different forms than the next.”
- “Increase in cost.”
- “Then agents out of area sell in one’s specialty market and can’t truly represent a client as his/her buyer’s agent.”
- “Not necessary. Will probably lead to increased expense and frustration. Small groups can move more quickly. Big groups like to throw money at problems.”
- “It’s big enough now: 11,750 members.”
- “We are a pretty isolated market, both physically and economically.”
- “We did and it’s been a nightmare. Merge all MLSs, not boards.”
- “Our association has already swallowed up a number of other associations. In doing so, we lost the attention to local interests specific to each area. Customer service has suffered. We used to walk into the association office and be greeted by name. Now, the association staff does not know the names of broker-owners, let alone the agents. It makes it hard to believe they care about us or our needs.”
- “We are on the state line of Oregon, different laws and culture.”
- “Because we are a small rural area and we would lose our voice in a big association. Our prices and demographics do not conform with the larger big city associations.”
- “I am happy with our association as it is and don’t wish to complicate things adding a lot more members.”
- “We’d become very small fish in a very large pond.”
The ‘I don’t know’ camp
The quarter or so of respondents who didn’t know if they’d like their association to merge tended to be more circumspect.
Of those who said “I don’t know,” 49 percent were agents, 22 percent were broker-owners or managing brokers and 18 percent were associate brokers.
Sample responses:
- “Not sure if it hurts or helps us.”
- “It doesn’t matter unless the bill goes down.”
- “Competing companies would increase with merger but market area would also potentially increase.”
- “Don’t know the benefits or drawbacks. Should I care?”
- “If financial circumstances dictated it would make sense to merge then I would be in favor.”
- “As long as the local associations are able to provide great services to the members, don’t fix it if it is not broken. On the other hand, just like anything else in life or in business, if it is not getting better, than it is getting worse. It cannot be business as usual, because humans will continue to grow and strive to be better everyday.”
- “It depends on why they are merging. Each case is different. I need to see the pros and cons.”
- “Went through a merger in the 90s and it was beneficial. Now the only merger of value to me would be expanding the MLS to state or national.”
- “I don’t know what other associations have to offer or how offerings differ. What is more annoying is that each association has different MLS rules, but we all belong to the same MLS. Therefore when you see an ‘error’ in the MLS and you call MLS they reply with that member belongs to a different association, so they don’t have to do what you do or vice versa.”
- “Who cares? If they are just going to charge me money for the privilege of accessing the MLS then what difference does it make who they are?”
- “There have been discussions about future mergers. I think it’s inevitable.”
- “It has no impact on my business.”
- “Depends on the cost versus benefits.”
- “Just depends on association ability to deliver services.”
- “Depends if it will benefit the members and won’t increase the fees.”
- “What is the benefit to me?”
Note: Respondent quotes may have been adjusted for clarity and length.
Read our full special report on association services
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