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Allan Erps' Blog

By Allan Erps | Agent in Nanuet, NY

ARTICLE: TWO REAL ESTATE BOARDS EYE MERGER! - IS THIS THE FUTURE?

2 Chicago-area real estate boards eye merger !!

Merger would create largest REALTOR® association in Illinois




By Matt Carter


 

The boards of two suburban Chicago-area REALTOR® associations have agreed to a merger that would make the Mainstreet Organization of REALTORS® (MORe) the biggest in Illinois and the fourth largest in the U.S.

If members of MORe and the REALTOR® Association of Northwest Chicagoland (RANWC) sign off on the merger agreement, MORe would absorb RANWC and grow to 16,000 members, extending its reach from DuPage County and most of suburban Cook County into Lake County and northwest Cook.

MORe CEO Pam Krieter would oversee the merged association, with RANWC CEO Peggy Kayser assuming the role of chief programs director.

The merger is expected to produce cost savings and economies of scale that would help MORe hold the line on local dues in a time of declining membership, without closing any of the six offices currently operated by both associations, said Christine Chase, the chairwoman of MORe's board of directors.

MORe and RANWC members are already served by a regional multiple listing service, Midwest Real Estate Data LLC (MRED). But there's some overlap between the two associations' memberships, and the ability to consolidate services like SentriLock lockboxes will result in savings.

Although MORe's local dues, currently $140 a year, are "among the most affordable in Northern Illinois, nobody wants a dues increase," Chase said. Merger talks talks began in March, and the prospect of a $40 increase in national dues in 2012 approved this month by the National Association of REALTORS® "just added to our discussions."

Chase, a broker associate at Naperville-based Ryan Hill Realty, said MORe has been conservative in budgeting for membership declines, and that both associations are financially sound. She said MORe's membership, currently 11,500, has been declining at a rate of about 7 percent a year for the last two years.

Robert Dohn, the president of RANWC's board, said his association has seen similar declines in membership, and has had to raise dues in each of the last two years. Further membership declines might have required another dues increase, he said. 

Dohn and Chase said merger talks were facilitated by the good working relationship between MORe and RANWC. The two associations serve nearly 200 communities -- each with their own governing bodies -- and MORe and RANWC have often cooperated on government affairs and political advocacy issues in the past, Chase said.

In addition to its headquarters office in Downers Grove, MORe operates satellite offices in Naperville and Tinley Park.  RANWC is based in Arlington Heights and operates satellite offices in Libertyville and northwest Chicago.

"There will be some consolidation, and some staff will be working from different locations," Chase said. All six locations will remain open, with some RANWC staff moving from Arlington Heights to Downers Grove.

The Arlington Heights office contains a "huge classroom facility," and because education is among the most important services the associations provide, there are no plans to close that or any other offices.

Chase said that so far, members have not raised objections to a merger. Notification and polling of both groups' members is expected to be completed in July.

"In a merger, people are always concerned about what will change," Chase said. "The questions I'm getting are, 'Are you closing (a particular office)?' People are always concerned about their own personal space. Mostly people are saying, 'Great, we will have a stronger, more unified voice.' "

According to MORe's most recent nonprofit tax filing, the organization employed 26 in 2009, with a $1.46 million payroll that included $196,656 in total compensation to CEO Krieter and $133,171 to deputy CEO Margery Shinners. RANWC's 2009 payroll for 20 employees totaled $930,259, including $135,423 to CEO Kayser.

Gary Clayton, CEO for the Illinois Association of REALTORS®, said the state has seen quite a few mergers over the past decade or so -- including a merger that created MORe, of the DuPage Association of REALTORS® and the Southwest Suburban Association of Realtors.

"From my perspective, consolidation makes sense if it's a member choice, and ... you can gain certain economies of scale, and if you have comparable business cultures."

At the end of 2010, state membership was down 25 percent from a peak of 56,968 in 2007, to 42,609.

Clayton said that, based on declines in new members and the historical relationship between the volume of home sales and the number of members, he expects state membership will continue to drop to levels seen during most of the 1990s, at about 36,000 members.

Asked if she sees the potential for further mergers, Chase said that in the last two or three years, "I've heard more conversations about mergers than in the last 15 years."

Although "mergers for a sake of a merger" are not the goal, it makes sense to consider opportunities as they arise, Chase said.

MORe and RANWC are already members of the Community Alliance of Chicagoland REALTORS®, along with the Chicago Association of REALTORS® and the North Shore-Barrington Association of REALTORS®. Members of the alliance maintain their respective boards, with each member taking a lead in tackling issues they handle particularly well -- such as education, technology or professional standards -- for the group as a whole.

NAR has provided funding to help REALTOR® associations around the country that are interested in pursuing mergers explore the issues with consultant Jerry Matthews, a former CEO of the Florida and Illinois REALTOR® associations.

Last year's merger of the REALTOR® Association of Greater Miami and the Beaches (RAMB) and REALTOR® Association of Miami-Dade County (RAMDC) created the largest regional REALTOR® association in the nation, Miami Realtors.

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