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Published by the CIPS Network of the National Association of REALTORS®
Fourth Quarter 2000
CONSORTIUM to kick off in NOVEMBER
By Nanci Gentile
The ten founding members of the International Consortium of Real Estate Associations will meet in November 2000 at the annual REALTORS® Conference & Expo in San Francisco for the initial signing of a multilateral agreement among them. The signing of this agreement will
be a springboard for the extension of Consortium membership to other national real estate associa-tions, beginning with the NAR Cooperating Association bilateral partners. After that, the Consortium will seek other alliances, as needed, to ensure global representation.
Beginning in August 1999, representatives from ten national real estate associations REIA (Australia), SECOVI (Brazil), CREA (Canada), IAVI (Ireland), NVM (Netherlands), NEF (Norway), RGR (Russia), SISV (Singapore), and NAR (United States) met to discuss the globalization issues facing their respective memberships. FNAIM (France) and IEA (Singapore) joined the group shortly thereafter. The consensus of the group identified the need for an international forum where nation-al
real estate associations could come together to share information, discuss the forces of a global economy, and facilitate international activities of their individual members. Participants agreed that
international norms and standards were needed to govern the real estate profession globally and to support meaningful transnational business. A central Internet-based networking system linking asso-ciation
Web sites, facilitating transnational referrals between association members, and providing ready access to foreign market information was seen as the linchpin component.
Subsequent meetings resulted in the formulation of the concept of an
International Consortium composed of the leading real estate associations serving national markets. The group agreed that, to be effective, it must act quickly to ensure that the Consortium would assume a leadership role in the global marketplace. It was also agreed that the Consortium should provide value to its member organizations’ domestic practitioner mem-bers as well as to members involved in international transactions. Although between them they represented nearly half of the world’s GDP, the ten founding members agreed that the Consortium should quickly open its ranks to prominent associations from all major world markets.
National organizations in a powerful alliance
As conceived by its founding member associations, the International
Consortium of Real Estate Associations is an alliance whose members are
leading national real estate organizations in the world’s major markets. Through a multilateral agreement and specific business practice proto-cols, this alliance is poised to provide significant benefits to its constituent members who seek to do transnational business as well as to its domestic constituents. The Consortium’s primary objective is to assist members of the respective organizations in efficiently and profitably doing transnational business.
Why a Consortium?
As national real estate organizations worldwide seek to respond to industry issues for this new millennium, several factors have converged that dictate the need for a strong global alliance:
- Globalization has had an immediate and powerful impact on real estate markets, attracting the attention of real estate professionals worldwide. Many practitioners with a local focus are looking to expand their businesses into the international sphere, and are turning to their real estate associations for advice and assistance.
- The rapid growth of the Internet has made the international market accessible to millions of consumers and to the most local of real estate agents. By the end of 2000, there will be 320 million Internet users globally. It is predicted that this number will double by 2005. Currently, about half of online users are North American. That’s about to change as Internet penetration increases worldwide. Western European usage is expected to reach 84 million users (30% of world total) by 2002. Asia will have more than 60 million users and South America a total of 26.6 million.
- The value of commerce connected to the real estate industry is staggering. Residential real estate sales in 1999 for the U.S. alone were more than one trillion U.S. dollars. As a result, many well-established companies and newly formed start-ups view the global real estate market as a source for significant revenue potential. Professional associations need to work together to keep real estate practitioners central to the transaction and to protect the best interests of their members.
Reinventing organized real estate
While some view globalization and ecommerce as a threat to organized
real estate, it is actually one of the greatest opportunities real estate associations will encounter. In developed markets, there have been few industry innovations in the past century. In just a few short years, however, technology has become a major change agent, forcing industry leaders to look at reinventing the role of real estate associations. This has had direct impact on international real estate activities.
This opportunity will not exist for long. Internet companies are poised to step in, happy to assume the role real estate associations have historically held in serving member needs, diminishing the value of affiliation with professional associations. But these companies will act in their own financial interest in order to survive, regardless of whether this is in the best interest of the practitioner.
To ensure the professional interests of our respective memberships are
protected, national real estate associations must come together to form an alliance more powerful than any single association could do on its own. Alliances and bilateral relationships among leading real estate associations in the major world markets have existed for some time, providing opportunities for meaningful dialog on how associations might pool their knowledge as they assist their members in understanding the forces of globalism, and facilitating their entry into the international arena. These relationships can now be the foundation for something more powerful the International Consortium of Real Estate Associations.
Creating value for the real estate practitioner
Real estate professionals around the world are looking for ways to better understand the globalization of real estate, and opportunities to expand their business activities into the global market by undertaking transactions that have transnational dimensions. Obstacles to achieving these objectives include:
- A lack of readily available information concerning foreign markets;
- An absence of international norms and standards applicable to the global real estate practice;
- Uncertainties associated with foreign cultures, practices, markets, and legal systems;
- The absence of an efficient referral network to help identify foreign business partners and assure payment of earned fees and commissions when transaction parties are located in different countries.
To address these obstacles, the Consortium has adopted this mission:
The mission of the International Consortium of Real Estate Associations is to assist constituent members (at a domestic and global level) to efficiently and profitably serve their customers and clients through the development and maintenance of international business standards, products, and services.
The tangible value for global and domestic practitioners includes:
1. The creation of an Internet-based menu of services
- Real estate-related goods and services purchasing program
- E-commerce among all member associ-ations with electronic payment systems
- Electronic dues billing options and collection for national member services
- Country real estate profiles and research tools (Just in time cultural and business practice information)
- Real property advertising system
2. The creation of international standards for professional ethics, best practices, and data transfer
3. Networking and referral tools
- Roster of member associations constituents
- E-mail and electronic chat room capabilities
- Have/Wants bulletin boards
- Transnational referral system, including templates with electronic referral fee clearance capabilities
4. An advocacy role to protect and promote private property rights and best practices worldwide
Creating value for member organizations
The impetus for a Consortium may be grounded in need to help facilitate transnational business a significant service in today’s global market-but member associations will also realize benefits that serve their members involved primarily in domestic transactions. The Consortium will become an international community of commerce,providing opportunities for significant cost savings for its members on business products and services, and lowering the cost of doing association business dues invoicing, wire transfers, etc. For example, a negotiated rate to purchase Dell computers saves REALTORS® money in the U.S. Expanded internationally, such savings would increase. Other providers will naturally strive to meet or beat these prices, so even those members who never participate in a transnational transaction can benefit from Consortium-related activities.
Involvement in an international consortium should appeal to domestic constituents of associations. First, it positions them to more easily facilitate an occasional transaction with a non-domestic component. More important, the Consortium’s efforts to ensure technology doesn’t displace practitioners, but instead keeps them central to the transaction, is a vital benefit to all members.
Consortium structure
The Consortium’s practical reality will consist of a series of rights and obli-gations based upon a multilateral agreement. This agreement will bind member associations and, through them, the organizations and individuals that make up their membership, to a series of basic commitments.
These basic commitments oblige each member association:
- To participate in a Consortium Web site and to exclusively endorse this Web site for international real estate purposes;
- To apply technical standards relating to electronic data transfer;
- To maintain in force a code of ethics governing the conduct of its constituents and to inform its constituents that its existing Code of Ethics applies to all transnational real estate transactions with respect to which any one of its constituents is a party;
- To make current membership information available on the consortium database;
- To bear financial responsibility for its own involvement and pay a proportionate share of the operational expenses;
- To furnish other required information on a timely basis.
The basic commitments are a good beginning but do not fully address the mission. True success will be achieved when standards are applied to all transnational transactions undertaken by the real estate professionals represented by its member associations. A second order of standards and best practices will be developed in protocols.
Protocols will be separate subordinate agreements and member associations can choose which protocols, if any, to sign. However, to gain access to the processes, entitlements, and obligations embodied in a particular protocol, a member association must sign it, signifying agreement to be bound by its terms. Protocols that address transnational referrals and procedures for alternate dispute resolution regarding fee entitlements are already being negotiated. |
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