Larry Mayall — extolling the virtues of competition
He’s been in a scrap with the Memphis Area Association of Realtors (a fight that cost him around $50,000 in legal fees), reached an agreement through which he would back out of that local board of Realtors and has started an independent real estate association and multiple listings service (MLS).
The independent association is the Mid-South Real Estate Board and it covers the Memphis metro area in Tennessee, Arkansas and Mississippi. MidSouthMLS.com, meanwhile, is the MLS board members can use to list properties for sale.
Mayall said his decision to start an independent board and MLS was something he felt compelled to do after his feud with the Memphis Area Association.
“I would never have done this if I hadn’t been kind of backed into a corner,” he said.
Tensions with the Memphis Area Association
Mayall said the Memphis Association started pushing him in that corner back in 2009. He said he was concerned about both market conditions and the ever-increasing costs that Realtors pay for dues and MLS fees. In short, sales revenue is declining, yet Mayall said the cost of doing business keeps rising.
The rising costs of doing business can be amplified in the Memphis market. Due to boards of Realtors rules and MLS regulations, a Memphis Realtor could well find himself paying dues to the Memphis Area Association, the Crittenden County, Arkansas, Board of Realtors and the Northwest Mississippi Association of Realtors.
Of course, there are MLS fees to consider for each of those boards and the costs of joining Realtors associations in Arkansas, Mississippi and Tennessee.
Given the trend of increasing dues Realtors pay and a business climate that Mayall considers to stay rocky in at least the foreseeable future, he said he started thinking about putting together a company independent of Realtors associations where agents could hang their licenses and sell property. The resulting company was 9to5 Realty LLC.
Mayall said he transferred ownership of that company to his son and continued to focus on First National Realty — a Memphis-based company that has around 300 members and was the second-largest office in the Memphis Area Association. Mayall said he had already run into some trouble with the Memphis Area Association prior to the formation of 9to5 — flat-fees and other practices that he said were common in other parts of the nation were somewhat novel in Memphis and were frowned upon. He said some association members also complained of his email recruiting policies and, well, a host of issues that Mayall said were minor.
After the formation of 9to5, however, Mayall said tensions with the Memphis Area Association escalated. Due to a board rule, Mayall said the association declared that he was a principal of 9to5 and, as such, was obliged to make sure the agents in that office were members of that local board.
The result of that squabbling was a lawsuit filed against the association by Mayall. While reading through lawsuits is rarely fun, you can find a copy of Mayall’s complaint here and you really should give that a look as the allegations therein and the attachments to the pleading are quite specific and revealing.
The lawsuit resulted in a settlement in which Mayall agreed to surrender his membership in the association and the Realtor dues demanded of him by the Memphis Area board were erased. Still, there was enough bad blood between the parties to compel Mayall to file an injunction against the Memphis Area Association after the settlement was reached.
Good relationship with boards in Crittenden County, Northwest Mississippi
Mayall is quick to point out that he is still a member of both the Crittenden County and Northwest Mississippi boards and never had a conflict with those associations regarding 9to5, which did operate in those markets. While 9to5 no longer exists, Mayall is still principal broker of First National’s operations in Arkansas and Mississippi. The company, however, has separate divisions — one is for Realtors while the other is for members that are members of the independent Mid-South Real Estate Board.
Some other boards, however, haven’t been as receptive.Take the case of Kim Wade, for example. Wade, a real estate broker in Jackson, Miss., had a radio show on WJNT in that city. He interviewed Mayall on the program earlier this month and left the station shortly thereafter.
Why? Wade said the interview prompted boycott of the station by the Jackson Association of Realtors. Mayall said the whole incident underscores that some in the real estate industry are uncomfortable with the idea of competition — a shame because competition benefits both consumers and real estate agents.
An independent association and MLS
At the first of the month, Mayall launched the Mid-South Real Estate Board and MidSouthMLS.com. The philosophy through which 9to5 was formed has carried over to the independent association and MLS. Mayall said members pay one fee to join an association that spans the Memphis metro in three states. There are no recurring MLS fees — accessing the system is free, but agents do have to pay up when a listing sells.
Joining the independent association costs $100 per year while MLS fees come to $125 per $100,000 in value of homes sold.
Mayall said the MLS has about 500 listings so far and 50 members, but he pointed out that it is less than a month old and is growing.
“It’s still just a baby,” he said.
Mayall said he expects his association to “take off” next year when it’s time for Realtors to pay their dues and are faced with a choice — continue with the Memphis Area Association or join the independent board and MLS. Mayall said those agents that come over to his association will find an organization that is less expensive to join and one in which members are treated equally.
Furthermore, he said the association’s code of ethics is brief, puts service to consumers above all else and is governed by applicable state law more than bylaws and rules. One system Mayall said he found easily-abused in Realtor associations is the notion of arbitration — peer review of members accused of violating the National Association of Realtors’ (NAR) Code of Ethics, local board policies, etc.
“We do not peer judge others,” he said. “There is no arbitration within the group. You can’t have a peer, in a competitive market, judging another peer.”
Will Mayall’s association be successful? That’s impossible to say, but Mayall said there is precedent that suggests independents can survive and thrive. For one thing, Mayall pointed out there are 2.5 million real estate licensees in the nation, but only 1.1 million of them are members of the NAR.
The remaining 1.4 millionaires licensees, Mayall said, aren’t all starving — many of them are doing very well. A prime example of an independent association that has done well, Mayall said, is the Real Estate Board of New York — that organization has been around for 100 years and has been joined by accomplished agents in New York City.
Mayall said independent agents and associations are fairly common in the United States, but are few and far between in Memphis and quite a bit of the South. His idea, then, is only novel in his part of the country.
Mayall said another advantage independents have in 2010 is the Internet. The Internet allows consumers to grab all manner of information about homes, comparable prices and other bits and pieces of data that used to be controlled by Realtors associations. Times, he said, are changing and agents have to change with them.
In the end…
Mayall said he’s not out to be a crusader or troublemaker. He merely wants to offer real estate agents another option. In that sense, he said his board will compete with the traditional Memphis Area Association and members of both groups stand to benefit. When a Realtor board and an independent association are competing for members, then it stands to reason that each organization will try its best to appeal to agents.
Furthermore, that level of competition can help consumers. Independent groups can resist the pressure of the traditional commission structure, for instance, and that could help both buyers and sellers.
Mayall said competition, then, is ultimately healthy in the market for all concerned. He said the Memphis Area Association hasn’t had much competition in the past, but they’ve got it now.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.