Rep Gillette Sponsors Bill to Unshackle Realtors

In the wake of lawsuits between real estate organizations and the Department of Justice (DOJ), as well as real estate organization infighting, proposed Arizona House Bill HB2003 will prevent brokerages from requiring union and association membership of their agents. This would protect the right of agents within each real estate brokerage to be members of an organization of their choosing—or not to be members of any organization—without fear of retaliation.

The largest real estate organization, mentioned among other associations in this bill, The National Association of Realtors (NAR), has been under fire in multiple states over its policies, which were dubbed monopolistic in a recent Texas lawsuit. In April, The National Association of Realtors settled a nationwide class-action lawsuit. The NAR was required to pay a $418M settlement and cut the mandatory broker’s commission.

The NAR, their local co-organizations, and the multiple listing services (MLS), are three tiers of organizations to which REALTORs are dues-paying members. Membership to NAR is required for MLS access, and membership is also required in order to call oneself a REALTOR®, which is a trademarked term, as opposed to the generic “real estate agent.”

Recent complaints by Arizona agents have included that these realtor organizations create a high barrier to entry, with the three-tier membership structure requiring agents to be members of all three organizations – including high dues for each organization. Local agents argue that some of these organizations do not serve their business enough to justify the fee, especially in commercial real estate spaces, making it preferable for them to choose to be members of one or two of the three organizations, but not all.

In the fall, Phoenix Association of Realtors (PAR) offered a new option to Arizonans, called MLS Choice, causing pushback from the NAR. MLS Choice was proposed to be a cheaper option for agents, and Andy Fegley, the CEO of PAR, has claimed it would “[c]reate a choice for brokers on how they wish to run their business.” He said that “…up until we’ve done this, it hasn’t been a choice.” This sentiment has been shared by other realtor associations, stating the that there was a “growing and vocal desire for greater choice and flexibility…”

Newly offered by the Phoenix Association of Realtors, MLS Choice allows agents to access the MLS without a NAR membership. In November, in Phoenix both HomeSmart and ReMax had announced their change over to MLS Choice, at less than half the cost of the three-tier membership. By December 18th, the National Association of Realtors had sent a cease-and-desist letter to the Phoenix Association of Realtors. By December 24, The NAR initiated the chapter revocation process for the Phoenix Association of Realtors. The National Association of Realtors argued that “Phoenix Realtors is violating NAR’s bylaws and Constitution by offering a non-Realtor membership option.”

Other frustrations voiced by Arizonan realtors have been charges to agents of mandatory $225 for electronic lock service through the MLS, mandatory zoom meetings for all members, and MLS systems taking junior agents to arbitration, fining them, and threatening to suspend access to the entire brokerage, over forms being incorrect.

This bill, HB2003 sponsored by Representative John Gilette (R-30), a retired Army Command Sergeant Major, aims to protect the right of agents to choose whether or not they will be a part of any unions or member organizations. Amid the confusion following battles, lawsuits, and settlements between these organizations, HB2003 would further protect agents from any retaliation, and would reaffirm Arizonans constitutional right to, and not to, assemble.Some Realtors interviewed expressed appreciation for the NAR establishing a standard for quality of service and expertise from realtors, creating security for buyers. However, they expressed that the generalized disillusionment with the NAR for many agents began after the $418 million settlement in April, with the elimination of rules regarding broker commission, amid frustrations with bureaucratic processes and limitations involved in the organization.

The bill was pre-filed in December, and session began January 13th.