What to watch as NAR taps into transfer tax fight

After a groundswell of support started building early this year for an increase in Chicago’s real estate transfer tax, local and state organizations affiliated with the National Association of Realtors decided to hit back.

The first round of campaigning from NAR and other real estate industry trade groups before the measure heads to voters in March targeted affected homeowners — those who own real estate over $1 million — with materials warning them that the one-time tax paid to the city when their property sells could triple.

A related entity dropped $125,000 on mailers, advertising and text and phone campaigning in mid-September, according to state campaign filing records.

But NAR’s reach could become limited as it deals with the fallout from a verdict that’s set to award plaintiffs $1.8 billion after finding the trade group liable in colluding to keep agent commissions high. It was the first decision in a wave of similar class-action suits that threaten the group’s long-reigning rules and the brokerage model at large.

How NAR and its state and local chapters continue to fund the anti-transfer tax campaign remains to be seen, but it will likely serve as a test case for how those groups will lobby for or against other local policy changes across the country.

Chicago-based NAR, one of the largest lobbying groups in the country, maintains that it will continue to fund grant programs for local chapters, and decisions on funding those grant programs will be made per policy. Those grants don’t include political spending. NAR referred questions about the ballot measure to the Chicago Association of Realtors.

Despite the issue’s prominence, the coordination between the national and local groups is unclear, even to the co-head of Chicago’s biggest brokerage.

“This is a local issue,” Thad Wong, co-CEO of @properties Christie’s International Real Estate, said. “The Chicago Association of Realtors, albeit much smaller than NAR, I don’t know what their resources are, and how much they would be supported by NAR. But I hope that they will be.”

Follow the money

Where NAR’s money begins and local and state chapters’ end can be blurry.

NAR, the Illinois Realtors Association and local chapters are behind the Illinois Realtors Fund, a political spending campaign registered in Illinois that’s overseen by the Illinois Realtors Association.

The fund has more than $310,000 in cash, as of its most recent filing in mid-October. This year it received $700,000 in contributions from the Illinois Realtors and $229,000 from NAR.

The Realtors Political Action Committee, a separate fund, had more than $744,000 as of the end of 2022.

Ahead of Chicago’s aldermanic and mayoral elections this spring, the Realtors fund spent more than $578,000 on candidates that support real estate.

The Chicago Association of Realtors collects $1,171 per agent annually. The national association charges $150 per member for 2023 and $156 per member in 2024, according to its website. In Chicago, agents pay $335 in dues to the Chicago Association of Realtors, $290 to the Illinois Association of Realtors and $396 in MLS fees.

Illinois Realtors and the Chicago Association of Realtors didn’t respond to requests for comment.

Lobbying is still a top priority for NAR. In late November, it held a conference in St. Louis focused on local issues, political action committee involvement and bipartisan cooperation. But it’s unclear how much its legal battles will cost the organization.

Prior to the verdict, Jonathan Miller, a housing market and real estate industry analyst, said he saw a future where NAR’s power is diminished because of the lawsuits and other scandals the organization has weathered recently.

“I don’t think the issue in terms of concerns about NAR is about agents ending up seeing a significant loss of income, because they’re not necessarily going to see half of a commission like they did before,” he said. “The issue is going to be whether NAR ends up surviving in its current form.”

Trade organizations have to prove their usefulness to their members, Miller said, something NAR has struggled with in recent years in a shift from its status as a “lobbying goliath.”

In Chicago, few are willing to comment on NAR’s foothold on the industry. And for a readily apparent reason: all residential real estate agents are affiliated with NAR in order to access MRED, the area’s multiple listing service.

But many members feel NAR, state and local chapters have their backs — on the transfer tax fight and other issues. Tommy Choi, a Chicago broker with Weinberg Choi Residential and president-elect of Illinois Realtors, is focused on opposing the transfer tax, which he called an attack on housing affordability and community development.

“I know that [NAR] stands against that and that’s because you know, for the most part, the realtor members stand against this mansion tax,” Choi said.

Editor’s note: This story has been updated.