Two prominent real estate agents have started a new trade association in a direct swipe at the embattled National Association of Realtors.
Founded more than 100 years ago, the group known as N.A.R. has long held sway over the American real estate industry, collecting hundreds of millions of dollars in annual dues from its 1.5 million members. It owns the trademark to the word “Realtor.” But in recent years, the organization has been saddled with a barrage of antitrust lawsuits and sexual harassment allegations. Over the past several months, multiple top leaders have stepped down, stoking concerns in the industry that the organization is on the edge of implosion.
Jason Haber, a New York agent with Compass, and Mauricio Umansky, the Los Angeles-based celebrity agent and founder of the luxury brokerage the Agency, told The New York Times that their new group, the American Real Estate Association, could be an alternative.
They are expected to announce their plan for AREA on Wednesday at Inman Connect New York, a real estate conference sponsored by Inman, the real estate news site. N.A.R. did not respond to a request for comment.
Mr. Haber, 46 and a native New Yorker, is a broker and entrepreneur who has also worked in local, state and federal government. He has been one of the most outspoken critics of N.A.R. since August, when The New York Times revealed widespread allegations of sexual harassment against its then-president, Kenny Parcell. He started the N.A.R. Accountability Project, a grass-roots organization that made several demands, including the immediate resignation of Mr. Parcell and its chief executive, Bob Goldberg. Both men have since stepped down.
Mr. Umansky, 53, is a reality TV regular and co-founder of the Hollywood brokerage the Agency. He is quickly recognizable to fans of “Buying Beverly Hills,” “Dancing With The Stars” and “The Real Housewives of Beverly Hills,” where his wife, Kyle Richards, is a series regular (the pair is currently separated). He has also been at loggerheads with N.A.R.; in 2020, he sued the organization over its policies on databases for real estate listings, arguing that they were anti-competitive and damaged a private database of off-market listings that he had created in Los Angeles. N.A.R., on appeal, asked the Supreme Court to throw that suit out and was denied. It was remanded to district court and lawyers for Mr. Umansky came to a settlement agreement with three of the other named defendants in the case on Thursday. With N.A.R., they agreed to a pause litigation, with the understanding that the case can be reopened.
The two agents had planned to start their group at a later date, but moved up the clock as they looked at N.A.R.’s legal troubles and leadership drain. The group’s new president abruptly stepped down in early January over what was described as a blackmail threat.
Members were dismayed in October when home sellers in Missouri won a landmark commissions lawsuit against the group. Under a N.A.R. rule, a home seller is required to pay commissions to the agent representing the buyer. Home sellers have long claimed that the rule forced them to pay excessive fees to the agents, but in the case of Missouri, a group finally sued. More than a dozen similar suits have since been filed across the country.
Another N.A.R. rule under legal scrutiny restricts access to most of the private databases used to list homes, called Multiple Listing Services, to N.A.R. members only. Most databases are operated by the local real estate associations that serve as subsidiaries to N.A.R., and their information is confined to a small geographic area.
Mr. Umansky said that AREA will offer its members a nationwide database of home listings as an alternative, built from the technology he acquired for his own private listings service. That platform, which they’re calling the National Listing Service, is currently live with limited listings at theNLS.com.
“A centralized database with access to the full scope of listings across the country is better for everyone in the industry, and someone just had to do it,” Mr. Umansky said.
In addition, AREA will allow agents to set their own commission rates and will not require any cooperation between buyer and seller agents.
Organizationally, AREA will not have a president and vice president, Mr. Haber said. He emphasized that rather than seeking to replace the 100-year-old association, his goal was to offer something new.
“N.A.R. was too big to fail, until it failed,” he said. “People want something different. We’re setting ourselves up for failure if we try to replicate the N.A.R. model.”
Both men acknowledged that many of the details of their new organization need to be ironed out. They are currently funding the organization with their own money but hope to raise between $50 million and $100 million from investors. They don’t plan to charge for membership for at least another six months, and when they do, they estimate dues will be between $400 and $500, which is about half of what agents pay to N.A.R. and their state and local Realtor organizations.
They don’t yet know where the organization will be headquartered, although they are looking at sites in Florida and Texas. What they do know, however, is their tagline: “Trade Up.”