The National Association of Realtors (NAR) has long been a cornerstone of the real estate industry, representing 1.5 million members and wielding immense influence through its lobbying efforts and control of essential industry tools like multiple listing services (MLS). However, recent revelations about NAR’s extravagant spending and growing legal troubles have sent shockwaves through the industry.

A recent article in The New York Times unveiled troubling details about the organization’s use of member dues, raising questions about governance, accountability, and the long-term impact on Realtors. Here’s an in-depth look at the findings, their broader implications, and what they mean for the real estate landscape.

The Findings: Lavish Perks and Questionable Spending

At the center of the controversy is the organization’s leadership spending, with former CEO Bob Goldberg’s compensation package serving as a prime example. Goldberg negotiated a contract laden with perks, including:

• A $2.6 million annual salary (up from $1.2 million over five years)

• Paid memberships for private clubs in Chicago and Washington, plus a $75,000 initiation fee for a country club

• First-class airfare for both himself and his wife

• A $1,500 monthly car allowance

• Pet-sitting expenses for his dogs during business trips

Elected leaders, often referred to as “volunteers,” also enjoyed significant benefits, including six-figure stipends, luxury travel accommodations, spa treatments, and tickets to premium events such as *Hamilton* on Broadway.

These expenditures were funded largely by member dues, which contribute 87% of NAR’s revenue. With dues averaging $800 annually per member, plus additional fees for national advertising campaigns, the revelations have left many Realtors questioning the value of their contributions.

Legal and Financial Troubles

The revelations come at a time when NAR is already grappling with significant legal challenges.

Price-Fixing Lawsuit

A landmark price-fixing lawsuit brought by home sellers in Missouri accused NAR of inflating commissions. The case resulted in a $418 million settlement, which is expected to lower commission rates across the industry, directly impacting agents' incomes. This decision has also set a precedent, leading to further lawsuits questioning NAR’s practices, including its mandatory membership rules.

Forced Membership Lawsuits

Several agents have filed class-action lawsuits, claiming that the requirement to join NAR and its subsidiaries constitutes an antitrust violation. These lawsuits could challenge the association’s control over MLS access, a key tool for agents, and potentially dismantle its forced-membership structure.

Regulatory Scrutiny

Legal experts have flagged NAR’s spending as potentially in violation of nonprofit laws. Nonprofits are prohibited from excessive spending that benefits individuals within the organization. Experts noted that NAR’s practices could jeopardize its tax-exempt status, further complicating its financial situation.

Immediate Effects on the Real Estate Industry

The most immediate economic impact will likely be felt by agents, especially as commission structures shift due to the price-fixing lawsuit. With early surveys showing a downward trend in commissions, agents will need to adapt to earning less per transaction.

Additionally, NAR’s decision to raise membership dues and consider charging for previously free educational programs could place further financial strain on agents. These costs may deter new agents from entering the profession, potentially leading to a reduced workforce over time.

NAR’s reputation has taken a significant hit, with many members expressing frustration over how their dues are being used. As one agent put it, “What am I paying for?” This erosion of trust may lead to declining membership numbers, especially if alternative models for accessing MLS data gain traction.

The legal challenges against NAR could have ripple effects across other trade organizations. If courts rule against mandatory membership structures, similar organizations may face increased scrutiny, leading to significant shifts in how trade associations operate.

Long-Term Implications

The National Association of Realtors (NAR) has long been a dominant force in the real estate industry, wielding significant influence through substantial lobbying efforts. In 2023 alone, NAR spent $52 million on lobbying, ranking second among top spenders. Since 1998, their total lobbying expenditure has reached $850 million.

Chastin J. Miles at the NAR Headquarters in Chicago

NAR’s lobbying efforts, funded by member dues, have long influenced housing policies, commission structures, and industry regulations. With its credibility weakened, the organization may lose some of its political clout, creating opportunities for new advocacy groups to emerge.

The revelations may lead to increased oversight of trade organizations, particularly in the nonprofit sector. Regulators could impose stricter rules on how funds are spent, forcing organizations like NAR to prioritize member benefits over executive perks.

Membership Discontent

One long-time member, Jen McDonald, a broker in Reno, Nevada, voiced her frustration: “I don’t think they defended us. I think they defended themselves.” This sentiment reflects a broader dissatisfaction among Realtors who feel abandoned by the organization amid legal challenges and fee increases.

Audrey Chisholm, a nonprofit law attorney, noted that NAR’s spending practices could be considered "private inurement," a violation of tax law that could jeopardize its nonprofit status. If enforcement were to follow, NAR could face additional financial penalties or operational restrictions.

Rob Hahn, a real estate strategist, highlighted the disconnect between NAR’s spending and its members’ needs: “When NAR gets its ass kicked in every lawsuit and then throws brokers under the bus, it’s like, what am I paying for?” His comments underscore the growing dissatisfaction among Realtors who feel their dues are being misused.

A Turning Point for Real Estate

The revelations about NAR’s lavish spending and mounting legal troubles mark a critical moment for the real estate industry. As the organization faces scrutiny, Realtors are left questioning their relationship with NAR and whether the benefits of membership outweigh the costs.

While the immediate effects include financial strain and declining trust, the long-term implications could reshape the industry’s structure, creating new opportunities for innovation and competition. This is a pivotal time for real estate professionals to stay informed and prepared for the changes ahead.

Although NAR claims to "protect and promote Realtors," many members feel abandoned. With mounting legal battles and a reputation for prioritizing its leadership over its members, NAR’s credibility has taken a hit. Agents like you are left questioning whether the association is truly aligned with your interests and asking should I pay to become a REALTOR®?

Here’s how to stay ahead in an industry facing these challenges:

1. Invest in Personal Growth: While NAR struggles to adapt, focus on building your skills and brand. Look for resources and coaching that deliver real results without unnecessary fees.

2. Stay Informed: Understanding how industry regulations and legal cases affect your business is critical. Follow updates on commission structures and legal decisions to stay prepared.

3. Leverage Alternatives: Explore new technology platforms and educational programs outside of NAR to access tools and training tailored to your needs.

4. Reevaluate Your Membership: If you're questioning the value of your dues, consider whether the benefits outweigh the costs. Legal changes may soon offer greater flexibility for agents who want to opt out.

As the industry evolves, one thing is clear: transparency, accountability, and adaptability will be key to navigating the challenges and opportunities that lie ahead.