NAR and the Three-way Agreement

BY CHUCK KASKY, CEO, Maryland REALTORS®

Although a few pain points remain, we are settled into the new business environment with the implementation of the business practices agreed to by the National Association of REALTORS® (NAR). Maryland REALTORS® remains committed to helping our members adapt and thrive.

As you know, we worked tirelessly with all stakeholders, including NAR, Bright MLS, lenders, and appraisers to develop the tools we will need to successfully transact business. And we are not resting. As new information becomes available, we will share it with you.

On the NAR front, they are working to regain the trust of its members and have restructured, downsized, and announced a new focus on engagement with its constituent groups. One such group is brokers who were not included in the settlement agreement. They were understandably upset at the prospect of dedicating precious resources to evaluate the relative benefits of opting into the settlement against the risks of not doing so and being exposed to potential lawsuits later.

In the spirit of giving credit where it is due, NAR has made a concerted effort to reach out to brokers across the country and has dedicated significant resources to help brokers see the benefits of membership.

For more information, visit broker.realtor. There, you will find content and information on current trends. Some specific programs include Broker Power Hour Webinars, Edge Up Broker Edition News, REALTOR® magazine’s Broker-to-Broker online edition.

It is important for NAR to earn your trust because I still hear from members who are asking whether NAR membership is worth it and if there is a way to pay state and local association dues but not NAR dues. The short answer is no. The long(er) answer is below.

It all has to do with the “Three-way Agreement.” The basic concept is simple. The Three-way agreement outlines the rights of the member boards (local and state associations) to grant REALTOR® status to qualified members and binds the member boards to subscribe to the Code of Ethics, maintain good standing, and regulate the REALTOR® trademark, among other things.

The Three-way Agreement is embodied in state and local association charters entered into with NAR. The idea of the Three-Way Agreement, as depicted in the graphic on Page 27, establishes the relationships between NAR, state associations and local boards, is embodied in a board’s governing documents, it’s charter, license agreement to use the NAR trademarks, and other documents that define the inter-activity of NAR, state associations, and local boards.

The term “Three-way Agreement” refers to the structure of the REALTOR® organization. This agreement was established among NAR, the state associations, and local boards and associations. In our charters, the state associations and local boards and associations agree to:

• Accept the charge of properly granting and regulating the use of the terms “REALTOR®”;

• Subscribe to the NAR Code of Ethics; and

• Uphold and enforce the Code of Ethics within the board’s/ association’s jurisdiction.

Also, each local board agrees to maintain membership, in good standing, in the state association of the state in which the board is located.

In other words, the REALTOR® organizations are a federation of organizations, and this structure allows the REALTOR® organizations to use their combined resources (both human and financial) and influence to have a unified, powerful voice in shaping public policy, set recognized standards for ethical real estate practice, and contribute to the advancement of the real estate industry.

The state association integrates the work of local, state, and national bodies and acts as a link between NAR and its member associations. The local association of REALTORS® is most visible and best known to the public and our members. Most of the products and services members rely on every day are delivered by our local boards/associations.

Despite the well-known problems, this arrangement is the envy of the country. No other profession or industry has this kind of robust and integrated relationship across all three levels. They say many hands make light work, and because we all benefit from the work our members and staff do at the national, state, and local level, I could make a strong argument that it’s in all our interests to make this work, not work to tear it down.