The banks are going to win the "big grab." Instead, it should be called the "big pinch." The NAR knows that what they have done is open the door by throwing out agency, and their members are going to likely have their pockets pinched. When that happens, we should not blame the banks. The entire blame will fall at the feet of the NAR Executive Committee, who have been calling the shots for the past 15 years.

Fifteen years ago, the Federal Trade Commission issued its report calling for Agency Disclosure in the real estate industry. I think we all need to step back for a minute and take a look at the big picture, and exactly what has happened since.

1984 The FTC Report was released.

1985 The NAR formed a task force on agency to study the issue to make certain it had input and a certain amount of control on how agency disclosure would be presented.

1986 The NAR Task Force On Agency issued its white paper on agency and authored its publication, A Realtors Guide to The Law Of Agency, warning about the pitfalls of Dual Agency.

1987 States begin passing NAR's watered down version of an agency disclosure.

1988 Exclusive Buyer Agency arrives.

1989 Real Estate Commissions continue to pass agency disclosure laws, but do no actively enforce them, claiming there is a learning curve involved.

1990 More Real Estate Commissions pass more disclosure laws.

1991 The mega-brokers begin practicing dual agency in cities where EBA's were most active.

1992 The mega-brokers begin looking for ways to avoid lawsuits when practicing dual agency.

1993 Exclusive Buyer Agency continued to grow and expand into more cities.

1994 The NAR formed a new agency task force to study seller Agency, buyer agency, dual Agency and facilitation. This task force gave a resounding "NO!" to Facilitator relationships.

1995 The NAR formed a new task force to study facilitator / transaction brokerage. This task force also gave a resounding "No!" to facilitator / transaction brokerage.

1995 The NAR Executive Committee moves their facilitator / transaction brokerage proposal to the NAR Standing Professional Standards Committee, who quickly votes to move this type of practice forward.

1995 The NAR removes the word "Fair" from their Code of Ethics.

1995 The NAR sends lobbying guidelines to each of the state associations telling them to make certain they legislatively get the Common Law of Agency abrogated.

1995 The National Association of Exclusive Buyer Agents was formed.

1996 Mega-broker Edina Real Estate settles a 1994 class action lawsuit, brought against it for practicing dual agency, at a reported tune of $36 million.

1996 State Associations begin getting their legislators to pass legislation abrogating the Common Law of Agency, creating a hodge podge of different types of real estate practice from one state to another.

1997 The NAR moves away from the word Facilitator as being too pedestrian, replacing it with the term Transaction Broker.

1997 The NAR spends a reported $1.000,000 to buy REBAC, even though earlier NAR officials had stated they would never do anything such as form a separate council or group that might divide the residential side of the industry into two separate services.

1998 The NAR changes it's COE to include third party brokers, who have no contractual agreement with the listing company but who instead are being compensated contractually by an outside source (third party), into arbitration.

1998 Oklahoma Real Rstate Commission, lead by Realtors, loses a case before the Oklahoma Supreme Court, attempting to eliminate the truthful advertising of SAVINGS by buyer brokers.

1999 The State Association lobbies for and gets the Oklahoma Legislature to pass a law removing agency from the practice of real estate in Oklahoma, with an exemption for companies whose registered trade names include the words agent.

1999 The NAR dumps millions of dollars into a national PR campaign trying to improve Realtors' diminishing image.

2000 The NAR removes all references to agents and agency from its COE and literature.

2000 The NAR moves to forbid dual agency for sales associates, but allows it for broker members through its new designation, Assigned Agent.

2001 E & O Insurance premiums increase nationwide even though the NAR had previously claimed that doing away with agency will reduce its member's liability.

2001 The NAR removes references to fiduciary duties from its COE and literature.

2001 The NAR renews its commitment to dump Millions more into a national PR campaign.

2001 The NAR opposes banks entering the real estate brokerage business with the argument that banks will not be loyal to customers like Realtors are.

2001 The NAR issues a national press release, accusing banks of wanting to GRAB our business by entering the real estate brokerage business.

I cannot think of any thing, or any combination of things that the NAR and/or the Realtor controlled Real Estate Commissions could do that would better benefit the business opportunities of the growing EBA community.

I do not believe any state legislature can pass a law, which could withstand a higher court challenge that would prevent me from contracting with a consumer to represent them as an agent. Furthermore, I do not believe that any state can pass a law, that cold withstand a higher court challenge, that would prevent me from advertising truthfully that I provide agency level of service.

This presents a very interesting situation. The NAR and the state associations have spent who knows how much money, time and energy leading us down this road of non-agency. They have backed themselves into a corner. Their argument that banks should not be allowed into the industry is based on, of all things, that banks will not be loyal to their customers. Well folks, this might have been a good argument in the past when the NAR promoted the agency relationship as the primary difference between non-licensees and us. But today, the NAR has promoted the abandonment of the agency relationship in favor of non-agency where everyone is a customer, no one is a client.

So far, all that has been accomplished with this is:

E & O rates have increased.

Every FSBO operator in the country can now use a local board's MLS to advertise their FSBO offering not only locally, but have access to Realtor.Com.

They have greatly divided the industry.

Consumers are more confused than ever about our role and are now looking for alternatives in their home buying efforts.

Banks and who knows what other non-traditonal entities will in all likelihood will be able to enter the industry.

We may lose our positions as being in the center of the real estate traction.

What is the NAR going to say to you, me and 800,000 other dues-paying members when in a few years a legal case makes it through the courts and the high court rules that we are agents, regardless? What are you going to say and think when my company, or another like it, opens an office next door to yours someday, promoting that we represent our clients legally as agents, 100% of the time, and the consumer can expect a higher level of service than what they can get elsewhere?

Believe me, it is going to happen. The larger question is, how is the NAR going to backtrack? Are they going to do it with dignity themselves, or are they going to wait and do it by court mandate? Right now, I believe our organization is digging one very deep hole for itself. I hope they have brought along a very long extension ladder, because I think they are going to need it.

Published: January 22, 2001

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