The End of the NAR Expo Era
(With a few minor edits, this was originally published on InmanNews 11/1/19)
If you are not planning on attending the NAR EXPO in San Francisco you are missing out – but if you have the opportunity I highly suggest attending this week, because it will never be as influential or significant again.
My first NAR was in 2003 and coincidentally it’s in the same location as this year – The Moscone Center in San Francisco. That show was hailed as “the mother lode for real estate industry professionals, greenhorns and grizzled veterans alike” and featured speakers included Dr. Phil and Guy Kawasaki and a performance by Glenn Frey of The Eagles. The first time I entered the Moscone Center for NAR, I was astonished at the scale of the event. It was massive – on both sides of the street in two halls with exhibitors jammed everywhere. Over the years, attendance continued to grow and peaked at around 30,000. The opulence and magnitude of the booths was astonishing, the parties epic. This event is in its 101st year and the 13th time in San Francisco, the most popular destination.
Attendance and vendor count is a good way to measure the health of an event and 2005 was at a near peak for vendor participation with more than 550 booths. Sadly, this year’s expo will have about 30% fewer participants than my first year. This year also marks the first time in recent history that the expo will shrink from four days, to three.
Most Popular NAR EXPO Locations
This is not some far off horizon issue, but rather is happening right now, under our feet.
This transition has not happened overnight, it’s more akin to slow erosion of the beach head over time vs category 5 hurricanes that change the lay of the land. But the problem here is that there are multiple Katrinas lined up facing the NAR Expo.
While its too soon to write an obituary, the writing’s on the wall. This is the sunset of an era and this is the last great NAR EXPO.
Six major factors are influencing the situation, that if left unchecked and allowed to run their course, will forever alter the size and scope of the conference and its attendance, resulting in the slow demise of a once great trade show event. From my position, I feel there is little that can be done to slow these market forces.
iBuyer is a more efficient real estate process than the traditional method. This efficiency currently represents a small segment of the market, but is growing at a significant clip year over year. iBuyer also focuses on middle of the road homes (not extremely large or small) and those are the easiest homes to market and sell – this automation will reduce the quantity of inventory in the market (the low hanging fruit) and the remaining inventory will be fought over by those agents that specialize in the edge cases that can’t be automated. Thus, fewer easy commission dollars available = fewer agents.
The population that moves is shrinking, and we are becoming less nomadic, more rooted to our geography. Fewer people move now than at any point in our lives. Actually, it’s the fewest movers since the US Census started tracking in 1948. At last check, only 11% of people move annually – and that includes RENTERS, who make up about 50% of annual moves. Many factors can be considered here, but with buyer affordability down, renting has been on the rise.
Greed Is Good?
There is a shift or rather, a slide going on in the industry that is beyond the control of agents, teams and brokers as individuals. Brands, however do have a strong say in this fate. Brands are increasingly adopting the “loss leader” approach to running the real estate business. (Loss Leader: selling a service under market value in order to get additional business) The real estate transaction is the loss leader.
Agents want a larger commission split, and that money comes out of the pockets of brokers and brands. These 100% models also now have other benefits like caps, health care and stock… they are flourishing currently. It’s frequently the right move for an individual that knows the business. But how does a brand stay in business when they make pennies on the dollar for each transaction? They make money on the mortgage, title and ancillary services that surround the transaction. Advertisers, exhibitors, vendors know this, and we are seeing an increased interest in the other side of the coin as well.
Our team has found fantastic opportunities at mortgage events.
Your Honor, Your Honor
Multiple lawsuits currently threaten the very foundation of the majority of real estate brokerages. But I am not anything close to an attorney. Rob Hahn has deep knowledge in the space and has written extensively on the subject. In summary – 1099 as a method for employing real estate agents is under an intense spotlight at the moment that litigators are eagerly pur$uing. Should a suit win it will likely will set president and the agent as a contractor model would fall like a house of cards.
In order to help save the industry, NAR has implemented a plan that includes planned obsolescence of its numerous MLS’s and Associations. NAR is ritual sacrificing its own. Why does this matter? Roughly 40% of NAR EXPO attendees attend the event with flights, dinners and hotels paid for by their association. NAR is forcing out (and I agree with the move) people, reducing operational overhead and yet shooting itself in the foot, reducing its own attendance.
Buy Low, Sell High
It’s the economy, stupid. When the economy turns, just like every time it turns, there will be a reduction of agents as low earners decide not to pay their subscriptions and mls dues and to keep their licence valid, instead opting to invest elsewhere less risky. I’m not predicting WHEN it turns, but that it will. (a safe bet) And when it does, look out. This phenomenon reduced more than 400,000 (ballpark) agents in the previous downturn taking with them an unknown reduced number of Realtor dues, super pac donations, SAAS investments, hardware and software etc.
Yes, the sun will rise again. The NAR expo is not going away anytime soon. The point here is that the expo runs on vendors bank accounts. More vendors = more revenue for NAR, and optically, more vendors looks better, increasing member attendance. It’s interwoven.
Revaluate spent a kings ransom exhibiting last year with our NAR stage and we were far from the biggest spenders. Booth traffic was great and we had record sales. However our booth was not to have been on the edge of the hall, yet it was. In the videos from our stage, you can clearly see acres of concrete that are empty behind our booth…. NAR didn’t come close to selling out the booth space. Vendors only spend the money because of the traffic. When traffic drops, the vendors see less value and fewer vendors will participate and there is less revenue for NAR.
So pay heed my friends. Enjoy the 2019 NAR expo in San Francisco this year. Talk to vendors, take pictures and video, strike up conversations, ask questions, party your face off and have your mind blown. Don’t worry, there will always be a NAR EXPO in some shape and size.
Todd Carpenter and Greg Robertson taught me something long ago that remains true year after year – that no matter the market conditions, ibuyer, 1099 lawsuits, erosion, shrinking commission dollars or the mortgage industries increasing power, The Scarf King will continue to thrive at the NAR Expo.
Chris Drayer is CoFounder of Revaluate, the company that uses artificial intelligence to reveal leads. Revaluate has been recognized by Stephan Swanepoel as a 2017 Top 20 Trendsetter and as a 2017 Inman Innovator award finalist and by FitSmallBusiness as a top real estate software of 2019.
Excellent article. I have been in the real estate (1984 to 2002) and mortgage business since 2002 and I saw the writing on the wall many years ago with how the MLS’s and Associations operate. You are spot on with your analysis as to how and why the industry has and is changing and will continue to change.
Thanks for your kind words Mary.
Relatively few are tuned in to the issues at hand and the overall arc / trend. Aligning for the future makes sense.