Beyond Brokerage: NAR Strategic Direction
By Ellen P. Roche, Vice President, NAR Research
In the current environment of increasing homeownership rates, rising home prices and record-breaking home sales, REALTORS® and other real estate professionals are being productive and profitable. But even in the midst of all this good news, the National Association of REALTORS® is working to make sure that its members continue to have the tools to be competitive and successful. Part of that effort is developing a working strategic plan that allows the Association to look ahead to find the next opportunity and to avoid potential threats to the real estate industry.
The NAR strategic planning process begins with the Strategic Focus (see box) to ensure it is faithful to the principles of the REALTOR® organization. The starting point for the current plan is the internal and external research in the 2004 Environmental Scan* and The Nation's Residential Realty Business in 2010. Based on the recommendation of the Strategic Planning Committee, the NAR Board of Directors identified the six strategic objectives that anticipate the changes in the real estate business and seek to keep REALTORS® equipped to meet these changes.
The starting point - research
The Environmental Scanning process identifies the trends that are likely to have a significant impact on real estate and REALTORS®. It looks at the drivers of change that affect the real estate industry today and in the future. While the primary activity of most NAR members is brokerage, the Environmental Scan examines other trends beyond brokerage that influence the demand for housing and influence the dynamics of the real estate transaction. One example is demographic shifts. REALTORS® who keep abreast of changes in household compositions are better able to serve the buyers and sellers in the market. For instance, between 1990 and 2000, the percentage of single-person households increased from 24.6 percent to 25.8 percent. More single-person households may support the growth in demand for condominium residences in some markets. Another important demographic trend is the growth in minority households. During the next two decades, minorities will account for approximately two-thirds of household growth. The scan also reviews trends in technology by both housing consumers and real estate professionals and their firms. Recent research indicates that 71 percent of homebuyers searched the Internet in 2003.
The Scan also includes information on economic and ecological forces, political, legislative and regulatory developments, changes in the competitive landscape and the number, type and business practices of NAR members and real estate firms. By understanding these trends, REALTORS® can manage their business to take advantage of these trends, and prepare for a future in which they continue to be at the center of the real estate transactions. By monitoring this information, NAR can anticipate many of the changes in the industry.
NAR has a vast accumulation of knowledge about the real estate industry, and it looks for ideas from a variety of industry experts that provide a range of likely alternatives about the future. This year, the Association asked some well-known industry experts to advise the strategic planning effort: Steve Murray, Anne Randolph, David Colmar and Weston Edwards. These experts provided NAR with a scenario of the future that challenged the REALTOR® view of the real estate industry and helped NAR think more broadly about the future. Their report, The Nation's Residential Realty Business in 2010, is consistent with much of the Environmental Scan. For example, they agree that buyers and sellers will be more racially and ethnically diverse in 2010. The report also introduced some new ideas such as Generational Diversity that asserts "different generation consumers desire different levels of control over the real estate process." In particular, younger buyers are more likely to want to be more involved in the real estate transaction and will be less deferential to the experts.
Plan for the future
With this thorough background, the Board of Directors concentrated on six strategic objectives:
- Transaction: NAR will change its focus and scope to embrace and advocate for expanding the REALTOR® role in managing the entire transaction.
- Packaging: NAR will support member efforts to offer packages of services to consumers for their total real estate related needs.
- Specialty services: NAR will recognize the value of existing and new specialty groups and will provide each NAR member with appropriate products and services.
- Data security: NAR will lead the real estate industry in protecting member data, transaction data and an efficient marketplace.
- Political/regulatory/legislative/judicial: NAR will be the strongest and most effective advocacy group relating to property rights and real estate issues in the political, regulatory, legislative and judicial arenas.
- Diversity: NAR will strengthen its role in fostering property ownership and association involvement among diverse market niches, such as single-parent households, ethnic minorities and seniors.
The first three objectives - Transaction, packaging, and specialty services - all focus on changes in the real estate transaction including the expansion into settlement and other services beyond brokerage, and the implications for NAR members and the REALTOR® organization. NAR is moving forward with more detailed research on these issues and will be considering how to accommodate the needs of NAR members to modernize their businesses and continue to serve buyers and sellers.
The Board of Directors also gave its support to the ongoing NAR initiatives involving data security as this will continue to be of strategic importance to REALTORS®. Similarly, the committee recognized that NAR advocacy on behalf of private property rights plays a vital role in the continuing ability of our members to remain profitable. The committee also recognized that diversity is important in maintaining the credibility of NAR and the effectiveness of our members in meeting the demands of future home buyers and sellers.
Keep on planning
Strategic planning is the process of looking broadly and into the future to plan for change. With the rapid change in the real estate industry, the role of strategic planning has never been so important. The work done in 2004 was very important and may establish new interpretations of the role for NAR in advocating for its members. However, as important as this is, it is much more important to continue the strategic planning process. While it may be difficult to predict the future, if we continue to watch the future develop, REALTORS® will be better positioned to take advantage of the opportunities unfolding.
*For details on these and other important social trends REALTORS® can view the 2004 Environmental Scan at www.realtor.org
**by Stephen H. Murray, Anne Murry-Randolf, Weston Edwards, David Colmar, 2004.
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