A settlement by Keller Williams Realty announced earlier this month could mean that nearly a fifth of NAR’s members are no longer urged by large brokerages to join the national association or follow its rules.
That’s a stunning fact which can get lost in the news that Keller Williams will pay a reported $70 million to settle a commission lawsuit, referred to as Sitzer/Burnett. The settlement was in line with similar agreements by Anywhere and RE/MAX, where those companies paid big bucks and said they also would not encourage their agents’ NAR participation.
- According to a KW press release, it has 174,000 agents in the U.S. and Canada. The report does not break down how many agents are specifically U.S. agents, but it’s probably safe to assume that more than half are in the U.S.
- RE/MAX has 56,987 U.S. agents, according to a report.
- Anywhere has 190,300 agents in the U.S.
Conservatively, 332,000 U.S. real estate agents are impacted by the settlements. While it’s impossible to tell how many of these agents are Realtor members, it’s a safe bet that most are.
NAR reported in December it had 1,554,604 members. Do the math and you find that the firms with settlements could account for approximately a fifth (21.4%) of NAR’s total membership.
When does this lack of big brokerage support show up in NAR’s membership reports? The storm clouds are building, but the drop-off directly attributable to the lawsuits won’t happen immediately.
NAR’s membership slid 2.5% in January from the month prior to 1,515,837 members, which on the surface seems to paint a dire picture, but also may reflect elements of a normal membership cycle where numbers are softer at the beginning of the year and build as the year progresses.
This drop-off may also reflect that the market is a tough one for agents who are faced with higher interest rates and a lack of inventory on which to make a living. As with any sales-oriented business, it’s hard work to build a client base and a reputation, and in a slower market it’s normal for some agents to say the industry just isn’t for them.
Plus, there’s the normal membership churn from retirements in an industry where the median age of a Realtor is 60 years old.
Even if agents work in companies which are publicly backing away from NAR, they likely are members of one or more of some 500-plus Multiple Listing Services (MLSs) in the U.S. MLSs serve as primary property databases for agents and the consumers who rely on them.
MLSs, for the most part, are efficient at collecting and standardizing data. They then oversee feeding this data to thousands of websites including massive real estate portals such as Homes.com, Zillow and Realtor.com. An agent who wants to use one of the MLSs in most cases has to be a Realtor, although there are are exceptions.
Finally, if a Realtor wants to be a member of state and local Realtor associations, they have to maintain membership in the national association. Jettisoning membership in one means losing connection at the state and lcoal association levels in addition to potentially losing access to an MLS.
The point is, it’s too soon to directly attribute the membership losses to the legal situation and other leadership turmoil at NAR.
Still, the drop-off is worrisome, particularly in light of unsavory headlines that keep challenging the notion that NAR is still an industry leader.