NATIONAL ASSOCIATION OF REALTORS 2003 Annual Report
INDEX I. Cover Page II. Letter from the President (Cathy Whatley) III. About the NAR IV. Leadership for 2003 A. NAR Leadership Team B. Regional Vice Presidents C. NAR Senior Staff D. NAR Vice Presidents E. NAR-Affiliated Institutes, Societies, and Councils V. NAR’s Core Purpose and Principles VI. The Benefits of Membership a. Advocacy of Issues Important to Your Business and Your Industry b. Products and Services c. Knowledge Management d. Leadership Initiatives VII. 2003 Financial Highlights Print Entire 2003 NAR Annual Report Download the PDF of the 2003 NAR Annual Report
2003 NAR ANNUAL REPORT
NATIONAL ASSOCIATION OF REALTORS®
Published by the NATIONAL ASSOCIATION OF REALTORS Headquarters: 430 N. Michigan Avenue Chicago, IL 60611-4087 Washington, D.C., Office: 700 11th Street, N.W. Washington, D.C. 20001-4507 NAR Information Central: 800/874-6500 NAR Online: www.REALTOR.org
2003 NAR ANNUAL REPORT II. Letter From the President Dear REALTORS®: What a year it was! At the outset of 2003, the NATIONAL ASSOCIATION OF REALTORS expected a slight leveling off of home sales. Instead, sales shot through the roof for the seventh time in eight years, catapulting home sales to the highest number ever in history. The 6.1 million existing single-family homes that sold in 2003 represented a 9.6 percent increase over the record set in 2002. The optimism projected in those numbers provides a stark contrast to what was, in other areas, a year of great uncertainty—a year when our country faced the scourge of terrorism, a succession of corporate executives on trial for fraud, and a growing budget deficit. As in 2002, our industry prospered because Americans continued to see real estate investment as their safest haven in a changing world; they found stability and comfort in owning a part of the American dream. Not only did sales sizzle, but membership did, too. NAR’s 2002 annual report projected membership of 861,000 for 2003. By December, however, we’d surpassed the 960,000member mark, with NAR analysts forecasting we’d hit 1 million members within the first quarter of 2004. The strength and power of 1 million voices unified when discussing real estate–related issues was not lost on our country’s decision-makers. In 2003, we: • • • • Continued to block the U.S. Treasury Department and the Federal Reserve from giving large banking conglomerates the green light to enter real estate brokerage and management. Successfully advocated for transparency in insurance companies’ use of credit scores in underwriting decisions. Brought in record contributions ($4.4 million) to the REALTORS Political Action Committee, funds that will be critical to our efforts in 2004 to elect candidates who support the interests of the “REALTOR Party.” Advocated nationally for better housing opportunities for working Americans, including our nation’s underserved minorities, through our commitment to Habitat for Humanity, the HOPE Awards, and our Housing Opportunity Program, which supports both expanded homeownership and rental housing retention and development. In September, we began an important dialogue, sponsoring a national housing symposium in Washington, D.C., to help raise awareness of housing needs and to encourage REALTORS and other industry organizations and lawmakers to work together to find effective solutions.
The Housing Opportunity Program is incredibly important, because even in the best year ever for home sales, there were millions of Americans unable to afford a decent place to live. In an effort to bridge this housing divide, our local and state associations stepped up last year and pledged to address the affordability problem in their communities. I'm
incredibly proud of the range and creativity of initiatives that resulted—downpayment assistance programs, Habitat for Humanity builds, local housing summits, and homebuyer counseling seminars, to name a few. Such initiatives expand our business opportunities as REALTORS, enabling us to serve a wider audience. In addition, there’s nothing in the world that makes you feel better than helping people get into a home of their own! Internally, 2003 was a year in which our Board of Directors further shaped association policy to reflect evolving business practices that include online interaction with our customers and clients. In January 2002, our Internet Data Exchange (IDX) policy— known to some as broker reciprocity—went into effect, giving brokers the ability to download MLS data for their market area onto their Web site. The Virtual Office Web site (VOW) policy, passed in May 2003 and scheduled to go into effect in July 2004, creates a framework for giving our members the flexibility to serve consumers via online brokerage, while providing the necessary safeguards to protect listing data. The VOW policy spells out the rights and responsibilities of those using the data, ensuring that listing brokers have adequate protection for their agreements with owners. In all our activities in 2003, our abiding goal was to increase the value of membership for our nearly 1 million NAR members. That’s no easy task, and success would have been impossible without the leadership of NAR Executive Vice President and CEO Terry McDermott. It takes a knowledgeable and visionary CEO to oversee an association of this size; I’m grateful that Terry not only has that vision but also always keeps the best interests of our members at heart. That vision and commitment are apparent among the highly capable Association Executives and staff who run our state and local associations as well. I thank all of you—especially my vice presidents, Steve Hoover of Virginia and Mike Schmelzer of New York—for making 2003 a year during which positive, productive things happened. The outstanding work we did in 2003 was critically important to the success of the REALTOR association, ensuring that the association’s focus was to things that truly mattered to you.
Cathy Whatley 2003 NAR President
2003 NAR ANNUAL REPORT III. About the NAR The NATIONAL ASSOCIATION OF REALTORS is the premier professional organization for real estate practitioners and the “Voice for Real Estate.” Members of NAR are licensed to practice real estate in the 50 states and Washington, D.C., and the territories of Guam, Puerto Rico, and the U.S. Virgin Islands. Membership in December 2003 reached the all-time high of 976,960, solidifying the NAR’s position as the largest professional association and the largest group of small business owners in the country. By joining NAR, licensees pledge to conduct their business according to the association’s strict Code of Ethics and Standards of Practice. Thus, NAR stands as a beacon of professionalism for the real estate industry.
2003 NAR ANNUAL REPORT IV. Leadership for 2003 NAR LEADERSHIP TEAM President Cathy Whatley, CIPS, CRS, GRI, LTG President-elect Walt McDonald First Vice President Al Mansell, CRB Treasurer Pat G. Kaplan, CRB, GRI, e-PRO Vice President & Liaison to Committees Steve Hoover, CRB, CRS®, GRI Vice President & Liaison to Government Affairs Mike Schmelzer, GRI REGIONAL VICE PRESIDENTS Ronald L. Phipps, Warwick, R.I. Region 1 (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, Vermont) Joan B. Isgro, Saugerties, N.Y. Region 2 (New Jersey, New York, Pennsylvania) Barbara Alexander, Morgantown, W.V. Region 3 (Delaware, Washington, D.C., Maryland, Virginia, West Virginia) Myra L. Zollinger, Chapel Hill, N.C. Region 4 (Kentucky, North Carolina, South Carolina, Tennessee) Claude D. “Chip” Boring, Sebring, Fla. Region 5 (Alabama, Florida, Georgia, Mississippi, Virgin Islands, Puerto Rico) Scott C. Griffith, Brighton, Mich. Region 6 (Michigan, Ohio) Daniel F. Lee, Madison, Wis. Region 7 (Illinois, Indiana, Wisconsin) Richard J. Koestner, Davenport, Iowa Region 8 (Iowa, Minnesota, Nebraska, North Dakota, South Dakota) Michael C. McGrew, Lawrence, Kan. Region 9 (Arkansas, Kansas, Missouri, Oklahoma) Carole B. Horn, Lafayette, La. Region 10 (Louisiana, Texas) Laurie Urbigkit, Riverton, Wyo.
Region 11 (Arizona, Colorado, Nevada, New Mexico, Utah, Wyoming) David Hemenway, Cottage Grove, Ore. Region 12 (Alaska, Idaho, Montana, Oregon, Washington) Richard F. Gaylord, Long Beach, Calif. Region 13 (California, Hawaii, Guam) NAR SENIOR STAFF Terrence M. McDermott, Executive Vice President and Chief Executive Officer Jerry Giovaniello, Senior Vice President, Government Affairs Bob Goldberg, Senior Vice President, Marketing & Business Development Doug Hinderer, Senior Vice President, Human Resources, Office & Mail Services Laurie Janik, General Counsel David Lereah, Senior Vice President & Chief Economist Frank J. Sibley, Senior Vice President, Communications Dale Stinton, Chief Financial Officer and Chief Information Officer Nancy Wilson Smith, Senior Vice President, Leadership Programs & Planning NAR VICE PRESIDENTS Myron Adams, ITS Gar Anderson, AE & Leadership Development Janet Branton, Business Specialties Stephen Cook, Public Affairs Pamela Geurds Kabati, Publications Sue Gourley, Convention Mark Lesswing, Center for Realtor Technology Miriam Lowe, International Operations Cliff Niersbach, Board Policy & Programs Ellen Roche, Research Mary Stark-Hood, Member Benefits, Strategic Alliance, Marketing Research Walt Witek, Government Affairs NAR-AFFILIATED INSTITUTES, SOCIETIES, AND COUNCILS CCIM Institute The CCIM Institute is the governing body of the world’s largest commercial real estate network, with 16,000 members in North America, Asia, and Europe. Through its CCIM education program, the Institute confers the Certified Commercial Investment Member (CCIM) designation to qualified commercial real estate and allied professionals. Additionally, the Institute offers technology products and business resources that impact and influence the way its members do business. Council of Real Estate Brokerage Managers (CRB)
The Council of Real Estate Brokerage Managers (CRB Council) is an NAR affiliate that serves nearly 7,000 members. Since 1968, the Council has awarded the Certified Real Estate Brokerage Manager (CRB) designation to experienced REALTORS® who have completed advanced professional training. Council of Residential Specialists (CRS®) The Council of Residential Specialists is the largest not-for-profit affiliate of NAR. It is composed of approximately 40,000 members. Of these, more than 35,000 have earned the Certified Residential Specialist (CRS®) designation. The Council of Residential Specialists was created to attract and retain those REALTORS® seeking the knowledge, tools, and relationship-building opportunities needed to maximize their income and professionalism in residential real estate. Counselors of Real Estate (CRE®) The Counselors of Real Estate (CRE®) is a professional membership organization established in 1953 for real property advisers. Membership in the organization is awarded by invitation only, and 1,100 currently hold the CRE® designation. The purpose of the organization is to advance, enhance, and support its members by serving as a resource for information, by creating opportunities for professional development, by facilitating knowledge sharing, and by sustaining an environment of community and collegiality. Institute of Real Estate Management (IREM) The Institute of Real Estate Management (IREM) is an affiliate association of professional property and asset managers. IREM was founded in 1933. Its mission is to educate real estate managers, certify their competence and professionalism, serve as an advocate on issues affecting the real estate management industry, and enhance its members’ professional competence so they can better identify and meet the needs of those who use their services. Real Estate Buyer's Agent Council (REBAC) The Real Estate Buyer’s Agent Council (REBAC) was founded in 1988 to promote buyer representation skills and services. REBAC is NAR’s largest designation organization with almost 45,000 active members. This represents a seven-fold increase since REBAC became an NAR affiliate in the fall of 1996. Education is at the core of this growth. REBAC offers a curriculum of courses, culminating in the Accredited Buyer Representative (ABR) and Accredited Buyer Representative Manager (ABRM) designations. REALTORS® Land Institute (RLI)
The REALTORS® Land Institute (RLI) is an NAR-affiliate organization of land specialists. Established in 1944, RLI is dedicated to the advancement of this important real estate specialty and the education of its members. An important element of both of these missions is the Accredited Land Consultant (ALC) designation. Awarded to RLI members who have met educational and experience requirements, the ALC designation is recognized as the mark of an expert in land transactions. RLI services its membership through benefits, such as listing and networking tools. RLI and its membership also are active politically, creating a strong voice for land use and other important issues. Society of Industrial and Office REALTORS® (SIOR) The Society of Industrial and Office REALTORS® (SIOR) is the leading professional commercial and industrial real estate association representing more than 2,800 commercial real estate brokerage specialists in 20 countries on six continents. The Society certifies its members with the SIOR (specialist, industrial and office real estate) designation. Women's Council of REALTORS® (WCR) The Women's Council of REALTORS represents 15,000 real estate professionals. In 2003, WCR launched a new REALTOR designation—the Performance Management Network. The professional training courses dig deep into the hot topics that are shaping the real estate industry, such as effective negotiating, conflict and change management, networking to generate referrals and much more. WCR has an established network of more than 250 local chapters, with volunteer managers trained to position their groups as a business resource in their REALTOR communities.
2003 NAR ANNUAL REPORT V. NAR’s Core Purpose and Principles The NATIONAL ASSOCIATION OF REALTORS® operates with a core purpose of being the business and public policy advocate for REALTORS®. NAR leaders articulated this purpose based on the core values of NAR: • • • The right to own, use, and transfer real property Private enterprise, free market, and collective action The highest standard of professional ethics, conduct, and business practices
NAR's Objectives The NATIONAL ASSOCIATION OF REALTORS® strives to be the collective force influencing and shaping the real estate industry. It seeks to be the leading advocate of the right to own, use, and transfer real property; the acknowledged leader in developing standards for efficient, effective, and ethical real estate business practices; valued by highly skilled real estate professionals and viewed by them as crucial to their success; and to keep the REALTOR® the first point of contact and central to the transaction and interaction between buyer and seller. Working on behalf of America's property owners, NAR provides a facility for professional development, research, and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system and the right to own, use, and transfer real property. More about NAR and its history, click here.
2003 NAR ANNUAL REPORT VI. The Benefits of Membership A. Advocacy of Issues Important to Your Business and Your Industry NAR’s Government Affairs Division advocates for the preservation, protection, and promotion of the free enterprise system and the right to own real property. NAR provides a platform for advocacy on behalf of REALTORS and the public through its legislative policies, political programs, and field staff. Following is a summary of major accomplishments of the Government Affairs Division for 2003. • Fair Credit Reporting Act. Legislation (H.R. 2622) signed into law in December, amending the Fair Credit Reporting Act, incorporated several recommendations of NAR’s Insurance Task Force regarding use of consumers’ credit and insurance scores. Anti-Spam Legislation. NAR pushed to ensure that the new CAN-SPAM law (S. 877), which was signed into law in December, does not pose compliance burdens for REALTORS. The legislation authorizes an optional Do-Not-E-mail Registry, under the authority of the Federal Trade Commission. However, the FTC is not obligated to implement it and has said such a registry might not be necessary. American Dream Downpayment Act. NAR-backed legislation (S. 811) that was signed into law in December provides downpayment assistance for lower-income families to achieve homeownership; increases FHA multifamily loan limits for high-cost areas, which benefits REALTORS in commercial practice; and improves hybrid FHA adjustable-rate mortgages enhancing homeownership. Flood Insurance. Legislation supported by NAR (S. 1768) that provided a threemonth stopgap reauthorization of the National Flood Insurance Program was signed into law in December. Senate consideration of NAR-backed legislation (H.R. 253) reauthorizing the NFIP for five years and addressing repetitive loss flood structures was expected to occur in January 2004. Banks in Real Estate. NAR’s push throughout 2003 to encouraged Congress to approve an appropriations provision prohibiting for another year the U.S. Treasury Department from finalizing its rule allowing banks to offer real estate brokerage was successful. NAR-supported language in the Transportation/Treasury Appropriations bill was included in the 2004 Omnibus Appropriations measure, which was signed into law in early January 2004. NARbacked bills (H.R. 1111 and S. 98) barring banks from entering real estate brokerage and property management are still pending with majority cosponsorship.
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Veterans Legislation. NAR supported legislation (H.R. 2297), signed into law in December, that made permanent Reservists’ eligibility for VA-guaranteed home loans and restored the program allowing the U.S. Department of Veterans Affairs to make loans for the sale of foreclosed properties. Flood Map Funding. NAR-backed FY2004 appropriations bill for the Department of Homeland Security was signed into law in October, providing $200 million in funding for the Federal Emergency Management Agency’s flood map modernization program. Tax. Legislation backed by the NAR (H.R. 1115) was signed into law in May. The legislation reduces the capital gains rate from 20 percent to 15 percent, provides a bonus depreciation provision that includes tenant leasehold improvements, and provides an increase for small business expenses. RPAC. The REALTORS® Political Action Committee raised a record $4,437,998 in 2003, surpassing the year’s fundraising goal of $4 million. The RPAC participation rate for 2003 was 41 percent with more than 358,996 members donating to RPAC. So far this cycle, RPAC has disbursed more than $1.7 million in direct contributions: $814,000 to Democrats and $947,000 to Republicans. Also, NAR created, launched, and administered the REALTOR® Party Presidents Circle (RPPC), a new direct fundraising program. Conceived as a response to the Bipartisan Campaign Reform Act (BCRA), the Presidents Circle raised and distributed $150,000 in just six months from the inception of the program in May. Public Issue Advocacy Program. In 2003, NAR’s Public Issue Advocacy program launched a federal housing issue campaign in the Washington, D.C., media market in support of passage of the American Dream Downpayment Act and the Affordable Housing Tax Credit Act. The radio and print ad campaign was promoted under the umbrella theme, “Unlocking the Doors to Homeownership.” Issues Mobilization Program. In 2003, the $300,000 Issues Mobilization program budget was used to assist 10 REALTOR® associations with issue campaigns. Seven campaigns were victorious, including significant statewide insurance legislation that passed in the Texas state legislature. Two campaigns will not be resolved until 2004, and one campaign is ongoing—Wisconsin's “Building the New Wisconsin Economy” campaign. Isakson Opportunity Race. The new “Opportunity Race Plus” program focused in 2003 in supporting U.S. Rep. (and REALTOR) Johnny Isakson (R-Ga.), who’s running for the U.S. Senate in 2004. In 2003, four mailings were sent to REALTORS in Georgia, and three targeted mailings were sent to likely Republican households in Georgia. The public mailings and the print ad that ran in 16 Georgia newspapers were coordinated by NAR’s Public Issue Advocacy program.
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The Field Staff supports many of these legislative policies and political programs on the grass-roots level. In 2003, the field staff conducted 83 political education seminars; collected hard-copy letters from REALTORS® in targeted congressional districts to raise awareness and secure cosponsors for such issues as the Association Health Plan legislation and Affordable Housing Tax Credit legislation; worked to raise awareness of U.S. Rep. Isakson’s candidacy for the U.S. Senate; and encouraged the U.S. House of Representatives to approve tort reform and the Association Health Plan legislation.
2003 NAR ANNUAL REPORT VI. The Benefits of Membership B. Products and Services NAR carefully safeguards the REALTOR brand, as well as all the brands housed within the REALTOR organization. In 2003, NAR enhanced its products and services to members, including expanded offerings for designations, professional courses, and discounts for products and services with major corporations. REALTOR VIP® Program NAR’s member benefits program continues to provide REALTORS® with discounts or valuable added benefits from major national corporations. In 2003, NAR added a travel program to the First USA/BankOne credit card program and added many new partners, including Nextel, Marsh Affinity for health insurance, Global Work Life, Covad, and renewed partnerships with Hewlett Packard, Gateway, Dell, Liberty Mutual Insurance Co., and Hertz. Hundreds of thousands of NAR members are taking advantage of the offerings under the REALTOR VIP® Program. The savings can add up, often to many times the annual NAR dues payment of $64. In addition, the program generates more than $3 million in nondues revenue, money that’s used by NAR to cover the expenses of new programs or expand existing programs. REALTOR® University Thousands of NAR members took advantage of online education available through REALTOR® University in 2003. REALTOR® University, which debuted in 2002, provides online education through the platform of NAR partner The Learning Library. REALTOR® University offers hundreds of hours of online courses, many of which are approved for continuing education, ranging from designation courses (ABR and ABRM programs from the Real Estate Buyer’s Agent Council and CIPS for international business specialists) to general business and professional development courses. REALTOR® University's focus for 2004 include developing more designation courses for online delivery and increasing the number of states that approve the courses for continuing education credit. For other products from NAR or its partners, click here. e-PRO The e-PRO certification program, which helps NAR members incorporate the latest Internet technology into their business, is the fastest-growing certification program within NAR. CE credits are now available in the states of Arizona, California, Colorado, Georgia, Idaho, Illinois, New Mexico, Ohio, Oregon, Rhode Island, South Dakota, Tennessee, Texas, and Washington, and the RS Council has included e-PRO as an
elective course in the Certified Residential Specialist (CRS®) designation curriculum. There also are versions of e-PRO for association management and property management.
2003 NAR ANNUAL REPORT VI. The Benefits of Membership C. Knowledge Management Through its publications and Web sites—including REALTOR.org, REALTOR® Magazine, and REALTOR® Magazine Online—NAR reports and interprets information to help you operate your business more knowledgeably and effectively. Through the consumer site, REALTOR.com, NAR partner Homestore.com helps REALTORS market their services and their properties to millions of Web-surfing prospects. Following are all the publications and Web sites that provide you with valuable information to help you become more successful in your real estate career. REALTOR.org During 2003, NAR laid the foundation for a complete site redesign of REALTOR.org to better serve the needs of its members. One step forward in this process was the addition of Google, the gold standard of search tools, to power the site’s search functionality. REALTOR.org also added several topical and audience-centric sub-sites in 2003: American Homeownership Month, REALTOR Safety Week, the Center for REALTOR Technology, and the REALTOR Secure Program. REALTOR.org served as a catalyst for the REALTOR Pride Campaign, which encouraged NAR members to wear their REALTOR® pin and tout their membership to consumers, and furthered the association’s commitment to Smart Growth issues with a major redesign of the area's sub-site. The year ended with about 200,000 registered users. REALTOR.com NAR’s national listing and marketing Web site, REALTOR.com, continues to dominate all Internet real estate property listings and consumer traffic categories. Throughout 2003, property listings remained constant at more than 2.2 million with an average of 5 million unique visitors per month. Total visitors averaged more than 11 million per month, and views per listing skyrocketed in 2003 to an average of 500 per month. The tremendous increase over the previous year can be attributed to the site redesign, which launched in April, and to the continued support of REALTOR® organizations across the country. Under the leadership of Homestore CEO Mike Long and Allan Dalton, president of REALTOR.com, Homestore's relationship with NAR is as strong as it has ever been. In order to drive more consumer traffic to NAR members’ listings, Homestore spent more than $45 million in the past 18 months on portal agreements, including an agreement with AOL, the nation’s largest Internet service provider. Homestore was in negotiations with Microsoft Corp. in late 2003 to be the exclusive provider of integrated home listings and REALTOR® directory content to the House & Home channel on the MSN network. The agreement was inked in the first two weeks of 2004.
REALTOR® Magazine and REALTOR® Magazine Online REALTOR® Magazine, published 12 times per year, is the official magazine of NAR. It continued to serve as “the business tool for real estate professionals” in 2003 with groundbreaking editorial, including a series on affordability, the first-ever list issue, and a before-and-after look at how to stage a home for sale. The magazine’s Web site, REALTOR® Magazine Online, also was revamped to reflect the magazine’s design and provide better navigation to the business tools housed at the site and available only to NAR members. The site also offers exclusive online feature articles; expert columnists covering architecture, technology, and sales; daily and weekly industry news updates; a business tips newsletter; and archived articles of the print magazine and online-exclusive articles dating from 1996. Attendees at the November REALTORS Conference & Expo in San Francisco received daily updates of show activities through the REALTOR® Magazine Show Daily. Together, the magazine, Web site, and Show Daily garnered 19 industry awards in 2003. REALTOR® Association Executive Magazine For executives of the country’s nearly 2,000 state and local REALTOR associations and multiple listing services, NAR produces the quarterly REALTOR® Association Executive Magazine. From how to choose the right MLS software to how to put a spark in your education offerings, RAE is the definitive source of information for executive officers throughout their careers. In 2003, the magazine launched its redesign and expanded online presence. Specialty Publications NAR also produces a wide range of specialty publications, including the online Letter of the Law for members with a special interest in legal development; the quarterly REALTORS Commercial Alliance Report, a newsletter for commercial practitioners; and several Internal News Service e-newsletters for REALTOR association executives, MLS directors, NAR’s Board of Directors, commercial members, and the nation’s top 300 brokers. Center for REALTOR® Technology The Center for REALTOR® Technology serves NAR members as an industry advocate, implementation consultant, and technology information resource. During 2003, CRT ramped up its support for members through a number of new activities. CRT initiated two newsletters during 2003, one focused on technology information for association executives and brokers and the second geared toward the needs of IT professionals in real estate. In another effort to inform and educate, CRT sponsored, developed, and delivered a new IT track at the REALTORS® Conference & Expo in November. During the annual convention, CRT also delivered wireless (hot spot) technology access to all attendees. The hot spot’s success provided impetus to publish a how-to guide on hot spots for associations about how associations can use it as a non-dues revenue source. CRT continued publishing its annual REALTOR technology survey and added an MLS technology survey in 2003. CRT also published a white paper in 2003 that offered an in-
depth look at services that REALTORS® use in their businesses and developed and published a how-to guide on preventing e-mail spam. To help ensure the digital future of REALTORS, CRT launched the REALTOR Secure program. The program allows brokerages, MLSs, and associations to demonstrate their use of security industry best practices. Many security evaluators have joined the program and the first MLSs and brokerages have already had their technology security certified. CRT also made significant contributions to growth and acceptance of the Real Estate Transaction Standard (RETS). Through its outreach program, CRT presented technology topics at more than 15 REALTOR or association meetings and conferences in 2003.
2003 NAR ANNUAL REPORT VI. The Benefits of Membership D. Leadership Initiatives NAR is consistently recognized as one of the most powerful lobbies on Capitol Hill, but NAR’s leadership is manifest in other arenas as well. In 2003, NAR continued several initiatives that further strengthened its position as a national leader within the housing industry, the larger real estate community, and beyond. Source of Key Economic News for Americans NAR reported a record year in 2003 for existing single-family home sales, jumping 9.6 percent to a total of 6,100,000 from the previous record of 5,566,000 in 2002. NAR’s existing-home sales number is one of the nation’s key economic indicators, closely tracked by major media organizations throughout the country. But it’s just one of the many ways NAR’s Research Division works on members’ behalf. The group also tracks members’ business confidence; analyzes critical public policy issues; and conducts surveys, including its regular profiles of NAR members, brokerage owners, and recent buyers and sellers. NAR members can gain economic insights through such products as Real Estate Outlook: Market Trends & Insights and regional and local market reports for commercial practitioners. Communicating the Value of REALTORS® NAR completed the sixth successful year of its public awareness campaign in 2003. The television and radio advertising campaign is helping millions of potential homebuyers and sellers understand the value of using a REALTOR®. With its theme “Work with someone who’ll work with you. We’re REALTORS®. Real estate is our life,” the ads highlight the value REALTORS® bring to both residential and commercial transactions. Many new features were added to the campaign in 2003, including new ads featuring Good Neighbor winners and targeting the Hispanic and FSBOs markets. The campaign relies on rigorous consumer and member research to evaluate performance. The latest survey in 2003 found that 68 percent of consumers believed that using a REALTOR makes selling a home easier than trying to do so without a REALTOR®, up from 52 percent in 2000. At the same time, 69 percent of consumers believed REALTORS® take care of the details associated with buying and selling a home, up from 59 percent in 2000. Helping REALTORS® Stay Safe on the Job Real estate practitioners face more on-the-job risks than many other business professionals. To focus attention on this important issue, NAR launched the REALTOR® Safety Week Web site (part of REALTOR.org) in 2003 and officially designated Sept. 14-20, 2003, as the first-ever REALTOR® Safety Week.
Bringing History to Life The “Within These Walls” exhibition continues to be one of the most popular exhibitions at Smithsonian’s National Museum of American History. NAR is the sole sponsor of this 15-year exhibition, which opened in May 2001 and highlights the history of a single house and its occupants over America’s first 200 years. The historic house was transported from Ipswich, Mass., and reconstructed within the Smithsonian’s National Museum of American History in Washington, D.C. In 2003, NAR highlighted the sponsorship in metro stations and on buses around Washington, D.C.; ads in United Airlines’ Hemisphere and US Airways’ Attache in-flight magazines; and promotions during the Midyear Governance Meetings & Trade Expo. REALTORS® Relief Foundation In 2003, the REALTORS® Relief Foundation assisted the CALIFORNIA ASSOCIATION OF REALTORS®’ efforts to help victims affected by the state’s wildfires. RRF contributed $50,000 to the California Community Foundation, an organization CAR was working with in conjunction with this effort. Through the REALTORS® Relief Foundation Voluntary State & Local Participation Program that the NAR established in late 2002, the Rhode Island Association of REALTORS® signed up to facilitate the collection of contributions and subsequent disbursement of those funds to assist victims of the nightclub fire in February 2003. Annual Conference: San Francisco Almost 24,000 REALTORS® and guests attended the 2003 REALTORS Conference & Expo in San Francisco—the largest overall attendance in 25 years. There were 501 exhibiting companies, an all-time record. During the meetings, NAR’s Board of Directors voted to: • Extend implementation of VOW policy. The deadline for MLSs to adopt a virtual office Web site (VOW) policy was extended by six months to July 1, 2004, from the original Jan. 1, 2004, deadline. The extension gives MLSs, especially small MLSs, more time to implement the policy. Institute Affiliate dues collection changes. The procedure for collecting Institute Affiliate dues has been changed to make the commercial affiliates the point of entry into the NRDS database. For more information on the new policy, click here. Shorten election procedures. The deadline by which nominations must be made for national elected office has been pushed back six months, starting with the 2007 election year. The change shortens the election cycle. Introduce slate of candidates. The Nominating Committee approved the following slate of candidates for national elected office in 2005: Al Mansell, Midvale, Utah, for president; Thomas Stevens, Vienna, Va., for president-elect; Patricia Vredevoogd, Grand Rapids, Mich., for first vice president; and Mike
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Brodie, Plano, Texas, for treasurer. The Nominating Committee also found 2003 NAR Treasurer Patricia Kaplan qualified to be a candidate for the office of 2005 first vice president. • • Change title of RPAC fund-raiser. The National RPAC Fundraising Chairman will now be called the Political Fundraising Chairman. Approve new funding and budget items to: o Develop a REALTOR branding program akin to the “Intel Inside” campaign ($350,000) o Produce five audio Webcasts for Association Executives on timely topics and industry issues that impact day-to-day association operations ($10,000) o Create an online study guide for Association Executives working on their RCE designation ($25,000) o Expand the REALTOR® Organization Outreach program and education efforts program to include using staff subject matter experts to travel to state and local boards for presentations ($32,000) o Augment the Real Estate Transaction Standard (RETS) compliance tool, which will encourage technology vendors to create real estate solutions that can interface with each other ($447,900) o Create REALTOR® Secure program to define standards of care for keeping real estate information secure and maintain client and customer privacy ($439,000) Change professional standards policy. The professional standards policy now includes new provisions involving compensation disclosure in buyer/tenant agreements, appointment of members to interboard arbitration panels, and the ethical duty to disclose to cooperating brokers accepted offers with unresolved contingencies. Renew liability insurance. NAR renewed its professional liability insurance with AIG for the 2004 policy year at $2.8 million and allocated at least $162,000 for legal cases, including cases concerning MLS anti-trust in California, insurance premium calculation in New York, and wetlands jurisdiction in Maryland. Support spam-fighting campaign. NAR will work to ensure that government efforts to curb fraudulent, misleading, and abusive unsolicited e-mails do not impact on small businesses’ ability to conduct legitimate business online. Streamline VA appraisal procedure. NAR will work with the U.S. Department of Veterans Affairs to make the agency’s appraisal roster system more efficient by, among other things, requiring appraisal assignments to be completed in five to seven days and ensuring that appraisal accountability is uniformly enforced.
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Support HUD loan reporting. The BOD approved a policy that recommends the U.S. Department of Housing and Urban Development begin reporting loan activity to Congress on a weekly basis once HUD reaches 75 percent of its commitment authority. This will enable Congress to authorize timely increases to ensure continued operation of Federal Housing Administration programs. Sign international agreements. NAR signed bilateral agreements with Finland, Guatemala, Nicaragua, and Honduras.
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In addition, the 2003 Distinguished Service Award was awarded to Virginia Cook of Virginia Cook, REALTORS®, in Dallas; and Allan Yassky of Rockland Realty in Spring Valley, N.Y. The 2003 William R. Magel Award for excellence in association management was awarded to Charles Staro, CEO, of the New York State Association of REALTORS®. The inaugural Association Executive Community Leadership Award was presented to Diane Scherer, executive officer of the Phoenix Association of REALTORS®. A Focus on Real Estate Niches NAR Business Specialties was created to give critical mass to a variety of niches within NAR to provide them with integrated service and management attention that they could not afford separately but can together. Composed of Real Estate Buyers Agent Council (REBAC), REALTORS Land Institute (RLI), Appraisal, Auction and Resort Area & Second Home Markets, these divergent niches have a common need to service their specialized memberships. By consolidating management and communications functions, they now have access to staff and resources that they did not have before. An integral component of Business Specialties is CourseCalendar.com. Introduced in the summer of 2003, CourseCalendar.com has already become a magnet for professionals looking for real estate education. This “education Multiple Listing Service” currently lists courses offered by the NAR and many of its affiliates. These course offerings have generated an estimated $500,000 in nondues revenue for state and local boards in the last half of 2003. Examples of NAR’s expanded niche services in 2003 include: • Providing Innovative, Quality Services to Commercial Practitioner Members. The REALTORS® Commercial Alliance—composed of NAR’s commercial committee, subcommittees, forums, the RCA Advisory Board, Commercial Overlay Boards (COBs) and Structures (CSs), and the five NAR commercial affiliates (CCIM Institute, Counselors of Real Estate, Institute of Real Estate Management, REALTORS Land Institute, and Society of Industrial and Office REALTORS®)—is dedicated to serving the unique needs of commercial real estate practitioners members of NAR. The quarterly RCA Report, and monthly Commercial INS e-newsletter inform and educate more than 40,000 commercial members about industry trends, best practices, and NAR’s legislative and regulatory initiatives. The RCA Web site contains valuable information to help commercial members conduct business
more successfully. RCA task forces on License Reciprocity, Broker Lien Laws, and commercial CE Credits, made significant progress in 2003, influencing the passage of state legislation and influencing licensing regulatory agencies. The RCA assumed a leadership role in the industry effort to create commercial real estate data standards, which will help facilitate the development of Commercial Information Exchanges (CIEs). Today, there are more than 40 REALTOR®-owned and/or -operated CIEs among the 29 COBs and 110 CSs around the country. In 2003, the Special Work Group began to examine the appropriate role for NAR in creating a national CIE platform. Valuable research on industry terminology and the effect of technology on commercial real estate was published in 2003. The RCA is a charter member of the Real Estate Information Sharing and Analysis Center (ISAC), providing timely e-mail updates from the federal government to NAR commercial members on terrorism threats to commercial property. The RCA will continue to leverage NAR’s legislative and regulatory influence to achieve favorable public policy on issues such as terrorism insurance, depreciation of leasehold and tenant improvements, and tax treatment of depreciation recapture. • Expanding Services for Resort Practitioners. NAR recognizes the unique challenges for members working in resort and recreation areas and second-home markets. In order to better serve our resort practitioners, the NAR launched a number of new resources in 2003: a resort home page at www.REALTOR.org/Resort; a two-day educational course titled, “Resort Area & Second Home Markets”; “Find a Resort Specialist” member directory; national networking opportunities; and a Resort Symposium & Workshop. Held in February, the first Resort Symposium & Workshop was so successful that it will become a regularly conducted event, with the next one scheduled for June 2004. Research also is being conducted to study the feasibility of a certification for this niche. Advancing Buyer Representation. In a record-breaking year in 2003, more than 150 licensed course providers for Real Estate Buyer’s Agent Council (REBAC) conducted almost 900 course sessions with enrollment totaling over 20,000. Enrollment in the ABR designation course increased 25 percent, and more than 5,800 REALTORS earned the designation by meeting the education and experience requirements. In addition to classroom courses offered through some of the most respected real estate schools and franchises in the industry, REBAC courses also are offered through REALTOR University and other online portals, with enrollment doubling in the last year. REBAC also provides other educational opportunities even after a designation is earned. Through monthly print and weekly electronic newsletters, members are kept apprised of trends in buyer representation. Other member benefits directly
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address marketing and related business issues. REBAC also promotes buyer representation in general—and the ABR specifically—to the general public through a national radio advertising campaign, which includes spots on such special events as the Super Bowl, Grammy Awards, and the Olympics. Newspaper and radio stories also are distributed nationally through a news syndicate to further raise public awareness. • Facilitating the Reorganization of REALTOR® Land Institute. In 2003, NAR worked to keep vital an important organization for real estate professionals who broker, lease, manage, and develop land. Part of the RLI reorganization included a new organizational structure and identity, designed with the aim of increasing membership and awareness of the Accredited Land Consultant (ALC) designation. RLILand.Net, “the new online standard for marketing land throughout North America,” also was unveiled in 2003.
Evolving Internet Policies to Meet Members’ Needs The virtual office Web site (VOW) policy, passed by NAR’s board of directors in May, establishes policies that MLSs must apply to participants who operate a VOW and, thus, use MLS information in an online brokerage environment. NAR work groups spent more than a year formulating the policy, which ensures that listing brokers and their clients are protected from misuse of their data. The policy covers, among other things, how much MLS information can be posted online and the relationship VOWs need to establish with customers before granting access to the information. In addition, the policy gives MLS members the ability to opt out of having their listings displayed by any or all VOWs of other participants of their MLS. The VOW rules were originally set to go into effect Jan. 1, 2004, but in November 2003, the Board of Directors postponed the effective date by six months. Passage of the VOW rules came slightly more than a year after the effective date of NAR’s Internet Data Exchange (IDX) policy. That policy—known to some as broker reciprocity—requires REALTOR® MLSs to make a downloadable database of listings available to their participants who want to post the listings at a personal or company Web site. While the IDX policy was intended to enable what amounts to cooperative advertising of listings online, the VOW policy is targeted at regulating the evolving practice of conducting brokerage online. Both policies demonstrate NAR’s commitment to having policies that both reflect and enhance members’ opportunity to implement new business practices as well as to protect MLSs, members, and consumers. Celebrating Homeownership Opportunities for Minorities The HOPE Awards (Home Ownership Participation for Everyone) recognize organizations and individuals who are making outstanding contributions to increasing minority homeownership. The awards are given every two years. A distinguished panel of judges determine the award winners based upon the impact on the community served.
Awardees receive a $10,000 honorarium and a trophy at a gala celebration in Washington, D.C. Awardees also participate in a HOPE Awards symposium and news conference, where they can discuss their projects and answer questions from journalists and housing experts. In 2003, the HOPE Awards were given to the following recipients: • • • • • • Brokerage Award: Emily Moerdomo Fu, RE/MAX Greater Atlanta International Education Award: Deborah Howard, Pratt Area Community Council, Brooklyn, N.Y. Finance Award: Rev. Elmira Vincent, Mission of Peace Housing Counseling Agency, Flint, Mich. Project of the Year: Christopher Kui, Suffolk Homes by Asian Americans for Equality, New York, N.Y. Public Policy Award: Shanna Smith, National Fair Housing Alliance, Washington, D.C. HOPE Leadership Award: Rev. James Dickerson, Manna Inc., Washington, D.C.
Helping People Attain Homeownership In its second full year, the Housing Opportunity Program (HOP) is working hard on its mission to position REALTORS® as leaders in identifying, developing, advocating, and promoting business opportunities, programs, products, and resources that expand housing availability and ensure housing opportunities for all in both the rental and homeownership sectors of the market. In 2003, the HOP conducted a National Summit on Housing Opportunities, where participants from around the country addressed affordable housing issues. In June, as part of National Homeownership Month, NAR participated in the U.S. Department of Housing and Urban Development’s Homeownership Fair, aimed at helping first-time homebuyers gather valuable information about the buying process. In order to promote, develop, and advocate new approaches to affordable housing, NAR formally partnered with the National Association of Rehabilitation and Housing, the National Association of Counties, and the U.S. Conference of Mayors. In partnership with the mayors, the REALTOR® Ambassador to Cities initiative was launched in 2003 to highlight successful local initiatives and develop new local partnerships to increase housing opportunity. HOP's Web site continues to highlight successful affordable housing opportunity programs and provides tools and resources that REALTORS® and others can use to help promote housing opportunities in their community.
REALTORS® Making a Hometown Difference REALTOR® Magazine’s annual Good Neighbors Awards program recognizes REALTORS® who’ve made an extraordinary commitments to improving the quality of life in their community through volunteering. In 2003, the awards were sponsored by eNeighborhoods, the founding sponsor; Fannie Mae; and Connecting Neighbors. Winners received $7,500 for their charitable organizations. The 2003 winners were: • • • • • James Austin, Jr., Austin Company Commercial Real Estate, Fort Worth, Texas, Renaissance Cultural Center and the National Cowboys of Color Museum Jim Bess Sr., Blue Chip Real Estate, Apple Valley, Calif., Victor Valley Toys for Tots Claudia Deprez, CIPS, CRB, CRS®, Illustrated Properties Real Estate Inc., West Palm Beach, Fla., Northend Coalition of Neighborhoods James Pacheco, Prudential California Realty, Castro Valley, Calif., Christmas in April Castro Valley Inc. Bobbie Tugwell, GRI, CRS®, ERA Stirling Properties, Baton Rouge, La., Hospice of Baton Rouge
In addition, five honorable mentions each earned $1,500 for their community cause. The 2003 honorable mentions were: Carolyn Petreccia, Warwick, R.I.; Silvia Rodriguez, Rockville, Md.; Scott Swendiman, Redding, Calif.; Kathie Wells, Kailua, Hawaii; and Bert Waugh, Jr., Beaverton, Ore. To learn more about the 2003 winners, how to nominate someone for the 2004 Awards, and how you can make a difference in your community, visit REALTOR® Magazine Online’s Good Neighbor Tool Kit. A World Leader To ensure NAR members have access to international business, NAR continued to work to extend its core purpose and values to the global market. Through the International Consortium of Real Estate Associations, associations in 25 countries have been working together to develop business, professional, and technical standards and to build trust among real estate professionals worldwide. 2003 marked the launch of the consortium’s advertising service for distinctive properties, providing global exposure for listings with international appeal. In the United States, only REALTORS® can use this and other services available from WorldProperties.com.
Since 1992, the International Real Property Foundation has enabled NAR leaders to share core values of professional real estate practice with the world. The foundation is funded primarily by the U.S. Agency for International Development, private foundations such as British Petroleum and Ford, REALTORS, REALTOR® associations, and NAR. The common denominator of these contributors is that they are dedicated to the proposition that the surest way to establish and shore up democratic institutions is by improving standards of living, typically a by-product of strong market-driven economies. Outreach to New and Existing Members Membership outreach has been a strategic focus of NAR for several years. In 2003, more than 1 million residential and commercial membership reference guides and personalized membership cards were mailed to new and renewing NAR members. Through focus groups and online surveys, REALTORS® have been integral in helping NAR shape the format and content into a comprehensive reference guide that’s of value to members, whether novice or experienced. Additionally, state and local REALTOR® associations again had the opportunity to include a customized message on the cover flap of the guides. Customization provides an unprecedented opportunity for members to receive valuable benefit information from all three levels of the REALTOR® organization. In September, NAR began sending a welcome e-mail to new members. Once new members are entered into the NRDS database and NAR has an e-mail address, NAR sends the e-mail, advising the new members of their NRDS number and its varied uses; alerting them to the impending arrival of their membership guide; and explaining REALTOR.org and other benefits. NAR also makes an effort to get face-to-face with members. In 2003, NAR reached more than 50,000 members through a presence at 15 NAR, state, and franchise trade shows. Through this outreach, members learned firsthand about the benefits of membership: legislative and regulatory advocacy, REALTOR VIP® Program, publications, the public awareness campaign, and other strategic NAR initiatives. Perhaps the most active member outreach happens daily at NAR's Information Central, the association's customer service and support center. In 2003, the department logged nearly 75,000 e-mail messages and 125,000 telephone calls—that’s about 770 contacts a day (and an 18 percent increase over 2002). In addition to the call center, Information Central is home to NAR's library, the world's largest collection of real estate–specific resources; the membership records division; and the NAR archives, a history of vital printed material produced by the association during its 95-year history. Information Central is more than a knowledge warehouse and answer center. Its "Virtual Library" at REALTOR.org offers a variety of resources on specific topics tailored for REALTORS® 24 hours a day, seven days a week. Information Central's information specialists keep association staff, leadership, and members up-to-date on association and industry developments through specially researched Field Guides and can do custom research for callers, e-mailers, and Web surfers. The ProQuest database available to members through the Virtual Library provided unlimited, full-text electronic access to more than 2,000
business journals. Contact Information Central at 800/874-6500 or InfoCentral@realtors.org for assistance with any industry or association question.
2003 NAR ANNUAL REPORT 2003 Financial Highlights The 2003 Financial Highlights will be posted once NAR’s 2003 audit is complete.