Why Establish A Commercial Overlay Board?
A recent post here at The Source talked about how to establish a new Commercial Overlay Board connected with your local REALTOR association. By way of quick review: establishing a COB is the way a local REALTOR® association expresses a specialty in commercial real estate, creating an organization and resources geared away from residential practice and toward the very broad and complex world of commercial practice.
That post generated a good question from Tucson’s Barbi Reuter, Principal / Broker at C&W PICOR, who asked:
This is a good outline of the ‘how’ – I’d love to see the ‘why.’ Could you help us understand the added value a COB can offer the commercial real estate community over organizations and services already in place? Perhaps a follow up post. Thank you!
Follow up we will!
What Does Establishing A Commercial Overlay Board Achieve?
1. COBs improve the education of residential practitioners. In secondary and tertiary markets, the following scenario is quite common: a residential professional finds herself representing a commercial property by default. A small-town family business property owned by a homebuyer client, for example, might fall to her to represent and move. An owner-occupied commercial property can seem very similar to a resident-occupied home in market-making terms. In both areas, the broker needs to advertise, to show, to negotiate and to close. But the differences are stark, and risk of legal entanglements and malpractice rises sharply when residential practitioners inherit commercial deals. The COB is there to offer education programs, seminars, and courses to keep members current on vital issues, better able to serve the public, and meet state-mandated continuing education license requirements.
2. COBs provide dispute resolution. A COB provides the body of commercial practitioner peers needed to enforce the Code of Ethics and Standards of Practice of the National Association of REALTORS®, and to administer mediation and arbitration as they relate to commercial transactions. By design, various COB committees are active in this regard. Typical meeting agendas of a COB’s Membership Policy and Board Jurisdiction Committee include resolution of name and territory disputes between member associations with due process hearings. Multi-state arbitration issues are also handled, as is the implementation of Article 14 of NAR’s Code Of Ethics.
3. Separate identity. A COB is a free-standing, self-governing, self-sustaining association of REALTORS®. This is opposed to a CS (Commercial Structure) which is a commercial group within an already existing parent association and may be allowed representation on the parent Board of Directors. For example, COBs are assigned a separate NRDS (National REALTOR® Database System) identification number and are represented on the NAR Board of Directors, whereas CSs do not have a separate identity and are represented through their parent association. This distinction can be valuable when local associations are facing sweeping changes in commercial property markets that demand a professional identity dedicated to and focused exclusively upon the commercial practice be established.
Creating a Commercial Overlay Board gains these and many other things. For a full listing, NAR members with an NRDS login can check out The Commercial Overlay Board Guide.