This is a topic that has been long gestating in my mind. I think it is increasingly becoming important to the real estate industry — perhaps the country as a whole.
Recently, Inman News ran a fairly detailed story of little interest to the majority of its agent audience: “NAR: Commission suit insurance coverage ran out ‘some time ago’”. Andrea Brambila, star reporter, did her usual excellent work getting details from those in the know — including an email from NAR sent out on Wednesday of last week. We will return to that shortly.
That story might have been the breakthrough. I know what the issue is, and how and why we all must figure out how to fix the problem.
At this point, it is impossible to avoid the conclusion that the single greatest problem of organized real estate is that our leadership ranks are filled with complete and total incompetence.
The first law of leadership is that you be competent, that you be good at your job. The nicest, sweetest, kindest leader in the world is a danger and a threat to the organization if he or she is incompetent. The nastiest, most unpleasant, downright prick of a leader is an asset if he or she is super competent. See, e.g., Bill Belichick.
Whatever happens in the next couple of years, whatever comes to pass with these lawsuits, whatever happens with the DOJ or FTC, or whatever, Dar al-REALTOR (“House of REALTOR”) must get competent people in important leadership positions. That means those in charge today must be removed, either voluntarily or involuntarily, and the praetorian guard of REALTOR junkies who see no wrong, can criticize nothing, and defend everything that is the REALTOR Regime has got to step aside.
I have to note that if I sound more pissed off than usual, it’s because I am more pissed off than usual. Almost all of my friends are in the industry. Quite a few of them are in organized real estate, and they’re good people trying to do good things who are extremely competent at their jobs. But they’re surrounded by an ocean of incompetence and stymied at every turn. Instead of being elevated because of their competence, they get railroaded and sidelined because of politics. Then, because competent people are stymied, sidelined, and otherwise fucked with, the rest of my friends who are working brokers and agents who just want to do their jobs properly for their clients can’t.
There are some really good, salt-of-the-earth people who are very competent who care about their clients, about the public, and about the country in our industry. Some of the best people I have ever met are in this industry. They get screwed left, right and center because of incompetent leaders.
Yeah, I’m pissed. If you’re not pissed off, the question is why not.
The February 21 Email and Questions
We begin with the email that Lesley Muchow, NAR’s General Counsel, sent to state and local association executives on Wednesday, February 21. You can read the whole thing on Inman; please do so.
The key “defense” that NAR lays out consists of two points:
· NAR’s insurance has not changed.
· For antitrust defense, NAR and associations and MLSs who have not acquired excess insurance long have had a $1 million coverage limit. For lawsuits challenging cooperative compensation practices on the MLS, NAR has reached our maximum coverage limit of $1 million under NAR’s primary policy. Chubb, our insurance provider, determined that the copycat lawsuits challenging cooperative compensation “relate back” to NAR’s 2019 claim under the 2019 Chubb professional liability policy. That means the primary coverage from NAR’s insurance program does not cover state and local associations’ or MLSs’ defense expenses in these cases.
NAR had to release this email because of yours truly posting a tweet on February 14th, then actual news organizations confirmed that rumor. But let’s not forget what I actually tweeted:
Just heard from a friend in the REALTOR Assoc. world. Rumor-mongering at this stage, but some of y'all can confirm this.
I'm hearing that a major state REALTOR Assoc. CEO just told a roomful of local AEs that NAR's insurance for antitrust defense has run out and that no more funds are available to local Assoc. or MLS from that source. Therefore, every local (and all of the state Associations) is now on its own for legal defense costs.
If true, this will have enormous consequences in the right here and now, not years from now.
The CEO of a large state REALTOR Association got up in February of this year to tell a roomful of local Association and MLS executives that they were on their own for legal bills if sued for antitrust.
My source thought this was shocking news, and told me about it.
NAR’s response is, “Well, that coverage ran out some time ago.” The point of that, of course, is to suggest that people like me, Real Estate News, and Inman were spreading “rumors and misconceptions” and shouldn’t be trusted.
Ok, that’s fine. Let’s just go with ‘Rob is spreading misconceptions so don’t trust him.’ I don’t care. Because my job isn’t to inform REALTORs; that would be NAR’s job. And I have questions.
Precisely when did NAR know that its insurance for antitrust defense had run out? I’d appreciate a specific date.
Did NAR inform state and local association leadership about funds running out? If so, when and how? Again, specific dates and mechanisms please, because there is a world of difference between phone calls from then-CEO Bob Goldberg and a mention somewhere buried on Realtor.org.
If NAR did attempt to inform state and local leadership, could someone explain why a state Association CEO got up to inform all of the local leadership in February of 2024 that insurance had run out? And when that happened, all of the local leaders in the room were shocked and dismayed?
Finally, can NAR explain this answer in a “Q&A” that it itself wrote in the Wednesday email?
3. Is it accurate that NAR’s liability insurance has run out and there will be no coverage available to state and local REALTOR® associations to pay for the cost of defending the cooperative compensation suits?
· NAR’s liability insurance has not run out. However, it is accurate that we have reached our maximum coverage limit of $1 million for lawsuits challenging cooperative compensation practices on the MLS. Coverage for other types of claims is still available.
WTAF? Does NAR think the local AE asking that question is wondering about slip-and-fall liability coverage? The question specifically asks about “cost of defending the cooperative compensation suits.” The answer is some mealy-mouthed doubletalk bullshit that starts with, “No, liability insurance has not run out” and then immediately goes to “but no money is available for the actual thing you asked about.”
Meaning, the actual answer is, “Yes — we have run out, and you can’t get any financial support for hiring your own lawyers.”
Who in the world writes like this? Talks like this?
“Did you cheat on me?”
“No, I did not cheat on you. However, it is accurate that I have had sexual relations with someone else.”
“Did you really just gamble away our life savings?”
“No, I did not gamble away our life savings. However, it is accurate that the casino has all of our money.”
I call that incompetence, because I don’t want to assume actual malice on the part of NAR’s leadership. What do you call it?
Whose Job Was it to Keep Local Leaders Informed?
I have been banging the drum for the past few years about NAR’s failure to clearly communicate the seriousness of these commission lawsuits to the state and local leadership. You can look at numerous past episodes of Industry Relations for example, where I begged and pleaded with NAR to do more to keep local leadership informed as to what was going on.
Based on feedback from dozens, indeed hundreds of local leaders who always contact me privately (because they’re terrified of getting punished by Dar al-REALTOR), I know that NAR failed to do so.
That failure to inform the leadership — again, not the rank and file members but the leaders of local and state Associations and MLSs — has led to the situation they’re in today where fear, panic and lack of preparation are the norm.
Is that incompetence or malice? Because the one thing it isn’t is doing a good job of communicating.
The Asinine Public Relations Effort
At least two very highly publicized recent efforts by NAR to engage in public relations have been nothing short of disastrous.
First, we have the disaster that was the first video appearance of the new interim CEO Nykia Wright. From Inman News:
NAR posted the video to its competition.realtor site, gave it a dedicated page on nar.realtor, and posted it to its own social networks. But by around two hours later, the video had disappeared from those websites. Inman was able to capture a screen recording of the video from a tweet before that link stopped working as well.
Turns out, Wright got a critical fact wrong: that NAR had never set commissions. It actually did, and it’s well documented. How did that get past NAR’s PR and legal teams or its crisis communications firm?
Then Wright actually says on the video, “The real estate profession has been vilified by certain plaintiffs’ lawyers, sensationalized by a few reporters and misrepresented by people who know little about this business.” This from the former CEO of Chicago Sun-Times, you know, a newspaper filled with reporters. (Plus, Wright has been in the industry for what… all of 22 minutes? Tell us more about “people who know little about this business.” The PR flack who wrote that line should be fired, like yesterday.)
Here’s Inman with a zinger:
Asked how the real estate profession has been sensationalized, by which reporters, and whether Wright mean to vilify reporters for their work reporting on the lawsuits or if there was some other intention behind that reference, NAR did not respond.
That’s some excellent PR/communications work right there.
I call that incompetence, because again I don’t want to assume actual malice. What do you call it?
Second, we have the open letter from Nykia Wright that Inman says was “hitting back” at so-called “external commentary.” Except that open letter was so incredibly bad, so obviously corporate-speak, so insanely PR-flack spin that I had ChatGPT rewrite it in a more human voice.
When an actual AI bot sounds more human than you, that’s either incompetence or malice. We can say with 100% certainty that Nykia Wright, the human who is the interim CEO, did not write this letter. We can say with 100% certainty that NAR’s PR team wrote it.
Louder for the folks in the back… incompetence? Or actual malice towards the institution?
Last but not least — thought certainly not because we have run out of examples — we have the Silence = Consent issue. As I wrote on these pages, after the debacle that was Anthony Lamacchia, it was important that NAR distance itself from his commentary:
First and foremost, NAR must loudly and clearly tell the whole world that Anthony Lamacchia does not speak for NAR, does not represent NAR’s views, and does not represent the opinions of the vast majority of NAR’s REALTOR members. That last point is probably a lie, but it is what one might call a white lie, or PR spin. Lamacchia himself stated that he is not a NAR spokesperson, but at one point in the insult-fest, he let slip that he was a Chair of an NAR Committee. Ketchmark wrote that down in his notes.
It is absolutely imperative that NAR along with every defendant in every one of the 20 (and counting!) lawsuits distance themselves from Lamacchia and the commenters. They might have to go so far as to condemn some of Lamacchia’s juvenile insults, especially against the integrity of Judge Bough, the federal courts, and the legal profession.
Not only did NAR fail to distance itself in any way, shape or form… mere days after the embarrassment that was the “debate,” the sitting President of NAR, Kevin Sears, appears on stage on Lamacchia’s own conference:
In this appearance, Sears plainly states that the Dept. of Justice is the greater threat. As if he doesn’t know that the DOJ is watching carefully. As if he doesn’t know that the DOJ will have watched, have recorded, and have fully analyzed what he said on stage.
That’s some distancing there, fellas. If and when the DOJ gets Kevin Sears on the stand and asks him, “So, do you agree with everything that Mr. Lamacchia said?” and Sears goes, “Nooo, no way Jose!” — he’s gonna have to explain why he appeared on stage with the man mere days afterwards.
Say it with me: rank incompetence.
The hardworking men and women who make up the ranks of REALTORS, whose NAR dues pay the salaries of these “leaders” deserve better. Hell, all of us whose livelihoods depend on the real estate industry in some fashion deserve better from the national trade organization.
Core Competency
So what precisely is it that NAR — a trade organization — is supposed to do? Here’s Wikipedia:
A trade association, also known as an industry trade group, business association, sector association or industry body, is an organization founded and funded by businesses that operate in a specific industry. An industry trade association participates in public relations activities such as advertising, education, publishing, lobbying, and political donations, but its focus is collaboration between companies. Associations may offer other services, such as producing conferences, setting industry standards, holding networking or charitable events, or offering classes or educational materials. [Emphasis added]
So there are three core things that a trade association does, according to the above:
Public relations
Education
Lobbying
Which of these three things would you say NAR has done well the last ten years?
It ain’t public relations as we see so clearly. Lord knows it isn’t education, what with the rampant levels of unethical, incompetent and possibly illegal behavior on the part of so many card-carrying REALTOR members.
One is tempted to answer that at least NAR does lobbying well. But then one is forced to ask precisely what NAR has been doing since 2019 when the Moehrl v. NAR case was first filed.
As an example, here’s NAR’s 2020 Advocacy Agenda. You can search the entire document in vain for the word “commission” or the phrase “cooperation and compensation.”
Here is NAR’s 2022 Year-End Advocacy Success document. See if you can find the term “MLS” in there anywhere.
Look at the 2023 Year-End Advocacy Wins document, keeping in mind that October of 2023 is when the jury found NAR liable in Sitzer v. NAR. Lo and behold, we find “influencing litigation.”
Influencing Litigation - NAR, the Mortgage Bankers Association, the National Association of Homebuilders, and the National Apartment Association, filed an amicus brief in support of the Supreme Court's review of two cases challenging a New York rent control law to stop government actions that exacerbate existing housing shortages and affordability problems.
Oh. Never mind then.
What can we call this list of failures other than incompetence?
The Mandate of Heaven and What Must Be Done
The Chinese have a political philosophy concept known as the mandate of heaven. It’s a relatively complex idea that tries to marry personal virtues of the king with the approval of the gods, which gives him the right to rule. In practice, it meant that good governance and victory in battles meant the king had the mandate of heaven, while bad things happening — famines, natural disasters, corruption, etc. — led to the king losing the mandate of heaven.
Put another way, competence is the mandate of heaven. Incompetence means losing the mandate of heaven.
The first law of leadership is competence above all else. People are willing to tolerate a lot if the leader is good at his or her core job functions. People are willing to overlook a ton of negatives, if the leader is competent. Steve Jobs, the former CEO of Apple whose picture I used for this post, was known to be… ah… prickly. Famously impatient, treated people like shit, and very tough to work with or for. But… he was one of the most competent business leaders of the 20th century.
For the past several years, NAR’s leadership has lost the mandate of heaven because of incompetence. I don’t want to assume that the “leaders” are actually out to intentionally destroy NAR; but boy, if they had set out to do so… it’s hard to see what they would have done differently.
Sadly, while there are some real exceptions, far too many of the state and local leadership ranks are also filled with incompetence. Our crisis would not have gotten this far if there were far more competent leaders at all levels.
So what must be done?
In a way, it’s simple. Not easy, but simple: replace every single person in a leadership position with competent people. How?
Every elected leader in every REALTOR Association and/or MLS should immediately resign and run for office again. Emergency elections are a thing, and the staff can keep things going for a while. If those who have put together such a dismal track record refuse to step down, well, that should tell you everything you need to know about the institution.
The members should be asked to select leaders based solely on competence, without regard for race, gender, sexuality or anything else. Only competence matters and only competence should matter.
If members select leaders based on popularity, or because of what they want to do (as opposed to what they have already accomplished), then that’s on them. The organization will perish because incompetence leads to ruin, but the members voted in that ruin. No tears will be shed then.
The newly elected competent leaders — aka, the Board of Directors — should then evaluate every single staffer from the CEO on down based solely on competence. Use whatever metrics you want, because if you are competent yourself, you know what metrics matter. Hire slow and fire fast, with the goal of eliminating the incompetent and elevating the competent.
With a cadre of fresh leaders whose focus is on competent execution of the goals of the organization, Dar al-REALTOR has a chance to overcome the crisis, turn it into an opportunity, and emerge out the other end stronger than ever. Without competent leadership, there ain’t a snowball’s chance in hell.
The rest of us who are not in leadership positions have to start speaking up. We have to start agitating for competence. We have to demand more. Is that mean? Is that really not nice? C’est la vie, then. We can’t care anymore. Being nice to incompetent people is driving the entire industry into the ditch.
Enough already. Get competent, or get out.
-rsh
Meanwhile, the local association in my town is making DEI videos and bowling for RPAC. 🤡
My personal experience with REALTOR Association leadership is that the general membership could care less. who is President or on the Board of their local, state, or national association. Some of these so-called leaders are like peacocks that strut around in the imagined glow of their importance. When you check their sales figures, many of them are low producers.
Yes, some are good leaders who add value to the Association, but most of them are not permanent fixtures. They contribute their time and then go back to producing income.