With the recent rise in dues for my membership to the Raleigh Regional Association of Realtors, I had many questions. A $100 increase in local dues at a time when most Realtors business is down by 20%-30% or more was not good timing and I vented my frustrations in a Facebook post on October 27th. With over 100 comments on that thread and hundreds of texts, calls and emails, I realized there are others that had questions as I did.
Teresa Pitt, the President of the Raleigh Regional Association called me that weekend and we spoke at length on the phone. She also asked to set up a meeting with me the following week to discuss everything.
We met on November 1st and it was a productive meeting. I know I learned from the meeting and I felt like Dave and Teresa did too.
In order to share some of their answers with others who are interested, I gave them a printed list of my questions and gave them the opportunity to answer in detail.
The answers you see below are the questions and answers. I hope after reading this, more people will get involved and volunteer for committees at the association and take the opportunity in leadership.
Thanks for reading.
BP8
_________________________________
Dave Phillips response:
First, let us say thank you for giving us the opportunity to respond to these questions. We appreciate all the member interest you have generated and hope our answers help everyone to understand the complex situation RRAR has been dealing with in recent years.
It is important to note that the RRAR Board has not simply taken the easy route of raising dues without looking for other revenue sources and cost savings. In the past year, we have redeveloped a robust sponsorship program that had crumbled during covid, initiated a new advertising program that has generated significant dollars already, and restructured our relationship with TMLS to cut some costs.
In addition, our Finance Committee has made many cuts to the expenses in the 2023 and 2024 budgets and is looking into some better ways to gain income from our investments. Finally, we are establishing a special task force to find new revenue sources that will take the pressure off raising dues.
Who actually owns, or are stakeholders in RRAR?
The Stakeholders of RRAR are the members and the members are represented by the elected directors and officers that serve on the RRAR Board.
Who owns TMLS?
TMLS’s sole stockholder is RRAR and we have four other stakeholder associations: Durham, Orange County, Johnston County, and Alamance-Burlington.
Why is participation in TMLS tied to membership in RRAR?
This has been a rule in the Bylaws of TMLS for many years. RRAR invested in the foundation of TMLS and considered it a benefit of belonging to the Association. Approximately 50% of the MLS subscribers in the country have this same rule in place. Some states have laws that do not allow the MLS to be restricted to only Realtors.
Are there “reserves” for emergencies in the organization?
Yes. We have reserve funds set aside for capital replacement/purchases of $500,000, Legal Action of $100,000, an opportunity fund of $50,000 and an operating reserve fund that is 75% of our averaged annual expenses over the past two years.
During COVID, our membership (and revenue) soared and our expenses dropped because we could not travel or hold member events. This created an excess in our reserves (reserves over and above those required by policy). In 2022, with a drop in membership and dramatic inflation for all our expenses, we balanced our budgets by using this excess reserve money. After 2023, all excess reserves will be gone. We still have our normal reserves as described above.
What happens if there is a significant emergency?
RRAR is in good shape if there is an emergency. We have the reserve funds and own our building and another investment building (where Spanish for Fun rents). The reserve funds should be enough to handle most things, but we could always borrow against our buildings if needed.
Would the members have to pay an assessment?
While RRAR could assess members, it is very unlikely that would be necessary.
Why have dues not been raised since 2004?
Good question. We have been able to balance our budgets over the years mostly because our membership has grown consistently. We have doubled in size over the past 10 years. Inflation has been very low, which kept our expenses down. The combination of high inflation and shrinking membership has caused much of our current situation.
Did the past BODs do any studies for future needs?
Yes. Just last year we worked with a professional that surveyed all our assets and gave us expectations of what we could expect for capital replacement/maintenance and asset preservation over the next 15-20 years.
What prompted the BOD to raise dues now? Was there discussion? Did everyone just fall in line together?
We have known we were going to have to raise dues since 2019 and we have been discussing it that long. The question was when and by how much. The Board has been looking at historical financial data and analysis all year trying to determine what was going to be needed to balance our budget. Hundreds of hours were spent developing and reviewing data and budgets. Just in October, the Board spent three hours discussing the amount of the dues increase, including a special forum set up just to answer all questions. In the end, a majority of the Board voted for the $100 dues increase.
When the BOD voted for this increase in dues, was it done publicly with votes recorded in the minutes, or was it done as a “secret ballot?”
The vote was done by written ballot to make sure all members felt comfortable with their vote and were not influenced by peer pressure. We do not, as a general guideline, record the exact vote in the minutes, but the vote total was announced by the President as 16 in favor and 9 against. We broadcast our Board meetings on our member-only Facebook Group called the Raleigh Realtors Water Cooler. If you join that Facebook group, you can watch the recording.
If by secret ballot, where were those votes tallied? Who was responsible for the tally?
RRAR’s Legal Counsel counted the ballots and certified the vote. Because the meeting continued while the votes were being tallied, legal counsel stepped into the hallway to count.
Why did BOD members not want to put their name on this vote?
RRAR, per Bylaws, follows Robert’s Rules of Order. With any Board, it is the rule of the majority. The Board, as a single entity, either votes in favor or against motions and the majority wins. We never record names of votes like they might do in Congress. Trade associations and other non-profit Boards do not operate like that. Board members are free to say how they voted, but are encouraged to accept the will of the majority and support the decision of the Board, even if they voted on the other side.
How many of the BOD members represent large companies (more than 20 agents) vs small companies (less than 20 agents)?
Four RRAR Board members are from firms of 20 or fewer agents and twenty-two are from larger firms. The general membership features 1444 firms of 20 or fewer licensees (mostly one or two people shops) and 62 firms larger than 20. 5237 licensees are in the large firms and 3802 are in smaller firms. These numbers do not include secondary members who are primary members in other associations.
The mission statement says, “Empowering Realtor success by engaging members and delivering exceptional value.” What in the past year and what in the coming year are you providing to deliver “exceptional value” to members?
This is always the million dollar question for any association. We ask this all the time and are constantly looking for ways to make membership more valuable. RRAR offers a large number of educational and networking events for free and many educational opportunities for a fee. RRAR also administers the Professional Standards and Arbitration process that helps keep the marketplace stable. Many valuable services like Showingtime, lockboxes, and Forewarn are delivered by our MLS.
On the 2021 Form 990 filing, Part IX, link 21, “Payments to affiliates.” The association paid $3,911,478 to affiliates. Who are these affiliates and what do they provide for members?
These are the dues we collect locally and forward to the state and national associations.
Is it true that the staff are all working from home and we do not use the building?
No. The RRAR staff is working in the office and many events, committees and private rentals are happening again. Of course, during COVID, staff did work from home but have been back in the office working since 2021. TMLS, on the other hand, has become a virtual company and only uses the building for Board meetings and other events/meetings they hold.
Please explain the requirements to be eligible to run for a position on the RRAR Board of Directors?
Here is what the Bylaws say:
To serve as a Director, a member must have been a REALTOR® member of the Raleigh Regional Association of REALTORS® in good standing for the previous two (2) years, have not been involuntarily removed per Section 6 of this Article in the last five (5) years, and must have actively served on and met at least two (2) items of the following criteria:
- One complete term of service on an RRAR committee within the last five (5) years.
- Been a member of a sanctioned RRAR council for at least one-year (12 months) during the last five (5) years.
- Been a member of a presidential appointed work group during the last five (5) years.
- Has previously served on the RRAR Board of Directors within the last five (5) years.
- Graduated from the Triangle REALTORS® Leadership Academy.
How much do Zillow, Realtor.com, Homes.com etc. pay for the data that TMLS provides?
We get sponsorships from these organizations from time to time, but no fee other than a normal connection fee to TMLS is realized from these companies.
Are BOD meetings open to the public?
Any member can attend a board meeting, but not the general public. This year, we started broadcasting Board meetings on our member’s only Facebook page, Raleigh Realtors Water Cooler. We record the meetings and members can watch them in the Water Cooler when it is convenient.
When does the BOD discuss the budget?
Bylaws require the budget to be presented to the Board 30 days before the end of the year and approved no later than the December Board meeting. We generally vote on the budget at the November Board meeting. That meeting is set for November 8th.
Why did RRAR wait until a month prior to the invoices going out to let members know of the dues increase?
We wanted to have as much financial data as possible before deciding the level of dues increase. Notice was sent to all members two weeks after the Board decided to raise dues. While the invoices went out in November, they are not late until after January 15th.
Who made that decision?
The RRAR Board of directors approves the dues amount and budget.
May I have a copy of the proposed budget for 2024?
Sure, here is a link to the Proposed 2024 RRAR Budget that will be discussed and voted on at the November 8th Board of Directors meeting.
May I have a copy of the P&L statements for the last 3 years?
The 2020 and 2021 P&Ls are not a good measuring stick because our expenses were down significantly due to the COVID shutdown. Also, in 2023, we removed the NCR and NAR dues from our P&L statements since those dollars were simply being passed to state and national.
I am hearing that there is a large 100th anniversary event being planned at a cost of $80,000 and that a consultant has been hired at a cost of $20,000 to plan the event. Is that true? Wouldn’t that be considered unnecessary when dues have had to be raised to cover losses?
Not exactly accurate. The $80,000 (which has NOT been approved by the Board yet) covers several things to occur in 2024 to celebrate our 100th anniversary. The consultant is not planning the party. They will be hired to develop marketing, conduct interviews of members and help document our 100 years. The party is planned to be combined with the annual Holiday Party to cap off the year. The normal Holiday Party budget is included in the $80,000. There are other items planned and sponsorship revenue is going to offset some of the costs. The Task Force working on this project will make every effort to generate new revenue to offset costs associated with our Centennial Celebration activities.