His name is George Babbitt and . . . he was nimble in the calling of selling houses for more than people could afford to pay. -- Sinclair Lewis, Babbitt, 1922.
George Babbitt, that enduring symbol of middle-class conformity, loved to call himself a Realtor. The word had a high-class tone to it and differentiated him from the shysters and fly-by-night operators. The business of selling houses has never had the prestige of, say, running a bank, but calling yourself a Realtor made it sound like a profession, giving you a leg up on the guy who sold detachable collars. As Babbitt himself put it, "Makes me tired the way these doctors and profs and preachers put on lugs about being 'professional men.' A good Realtor has to have more then knowledge and finesse than any of them."
Real estate may have changed in the 60 years since George Babbitt, but not the people who sell it. Their handshakes are still firm, their laughter is still hearty. They still love the word Realtor and their national organization demands that it be captialized as a trademark. The Realtors have retained their small-town, small-business Republican roots. They still hunger for prestige and recognition.
Babbitt lives. This was apparent in late March when there were more Realtors at the Washington Hilton than at the opening of a new subdivision in suburban Los Angeles. It was billed as the annual Washington Conference of Realtors and it provided the expected vignettes of small-town rubes loose in the big city:
Thirteen Minnesota Realtors almost came to blows trying to divide a dinner check for $239 at Cantina d'Italia. Two tall and tanned Florida Realtors discovered true love over the coffee urns during the Monday morning convention session. At a cocktail party for 3,800 in the grand ballroom of the Hilton, a Colorado Realtor was overheard to say, "Then she ran off with some guy from Iowa who promised her three apartment buildings." After a morning of lobbying Congress, a Realtor from Longview, Tex., said, as he pushed his tray down the cafeteria line in the basement of the Longworth House Office Building, "I need a cold beer to settle the Scotch in my stomach."
All this brings us to the world's largest trade association, the 750,000-member National Association of Realtors. By nature, Realtors are joiners, good fellows and good mixers. Since the early days of this century, Realtors have been holding convivial meetings in commercial hotels throughout the country. It was at a mythical state Realtor convention that George Babbitt won plaudits for a rousing go-getter speech that "gave the profession a real boost."
Today the Realtors are as insecure as ever. The difference is that they have now come up with a whiz-bang strategy to sell an uncaring nation on the glory of peddling real estate. Their game plan is simple: try to play politics with the big boys in Washington.
First, the Realtors hired Jack Carlson, a big-name Republican economist, away from the Chamber of Commerce of the United States. Under his aegis, the Realtors downplayed parochial issues and began battling for a balanced budget. Last year, the Realtors' political action committee spent $1.5 million on the 1980 congressional elections. Most of the money went to support fiscal conservatives in both parties. Last fall, according to a survey of the organization, more than 80 percent of the nation's Realtors backed Ronald Reagan. Now they were in town -- 2,500 strong -- to savor the fruits of victory.
On Monday morning, President Reagan shared his jelly beans with a delegation of 50 Realtors at the White House. That evening at a banquet at the Hilton, Office of Management and Budget director David Stockman disingenuously claimed that the Realtors had provided the inspiration for the administration's economic program. On Monday and Tuesday, the Realtors swarmed over Capitol Hill, meeting with 408 members of Congress and about half the Senate to lobby for $48 billion in cuts in the federal budget.
Ten buses rented from East Coast Parlor Tours carried the Realtors from the Hilton to the Captiol. Each Realtor had been issued a 42-page briefing book covering issues from accelerated depreciation for apartment buildings to federal development of the barrier islands.
But everything took a back seat to the Realtor's obsession with the federal budget. Just that morning the association's Al Abrahams had told his troops:
"Let's not get too tough with the cogressmen. Let's not be mean to him. But this is one time when the issue is too important to let him off lightly.Tell him: 'Congressman, sir, we're going to measure you on how you stand on these budget cuts.'"
But sometimes congressmen have minds of their own as 16 Minnesota Realtors discovered when they called on Rep. Martin Sabo, a liberal Democrat from Minneapolis.
Gary Pagel, who works for the Minnesota Board of Realtors, asked the first question: "What do you think of Reagan's economic program?"
Sabo puffed on his cigarette, leaned back in his swivel chair and said, "Evil."
None of the briefings back at the Hilton had prepared Pagel for this. "What?" he asked.
The congressman repeated himself. "I wouldn't like to be in your business if the Reagan program passes."
Sensing things were deteriorating, Tom Driscoll, the paid director of the Minnesota Realtors, tried to explain how selfless the organization was in "supporting $11 billion in cuts in Housing and Urban Development programs."
Sabo, apparently fighting to keep his temper under control, asked Driscoll, "How do these cuts impact you, personally?"
Driscoll stammered for a moment. "Me . . . I'm just an official of the state board. Ask some of these other people."
Still staring at Driscoll, Sabo said righteously, "How it impacts you as a person is nominal compared to someone who depends on food stamps for something to eat."
Its impact on Sabo is nominal as well. He earns $60,662 a year.
After they left Sabo's office, Herb Bergson, one of the few liberal Democrats among the Minnesota Realtors, wondered, "What did all that have to do with selling houses in Duluth?"
The fireworks that flew when the Realtors met with Sabo were an aberration. Republican legislators like Rep. Bill Frenzel of Minnesota were effusive in their praise of the organization. But because of their conservative gospel, the Realtors had consistent problems with liberal Democrats.
For example, Shirley Norquest, a Realtor from Horseheads, N.Y., recounted how she had to chase Rep. Stanley Lundine (D-N.Y.) down a corridor of the Cannon Building when he walked our of a meeting with her group after 10 minutes. A leading House Democrat complained to Realtors vice president Julio Laguarta that Jack Carlson, the organization's chief economist, "was nothing but a Republican hit man."
The delegates may have believed that lobbying Congress was the purpose of the $1.5 million conference, but, in truth, it wasn't expected to accomplish much.
Rather, it was a harmless diversion -- like a tour of Disneyland. This came out in a post-conference interview with Al Abrahams, the Realtors' senior vice president for government affairs. "The lobbying doesn't make that much difference," he said. "It's not at all that critical. It just opens people's eyes to the realities of government."
Nonetheless, dabbling in Washington politics is pretty heady stuff. Take, for example, Laguarta, who has the good-ol'-boy manner that goes with owning one of the largest real estate firms in Houston. He boasted when the conference was over: "We are a force that has to be reckoned with. And we haven't even unleashed our greatest resource: those 750,000 Realtors spread over every congressional district in the country."
To the individual Realtors, sipping drinks, slapping each other on the back and milling around the lobby of the Hilton, Washington was the Emerald City. This was not the kind of conference where men in funny hats chase ladies of the evening down hotel corridors at 4 in the morning. Everything -- sightseeing, real estate gossip and having a good time -- took a back seat to their efforts to get taken seriously in Washington.
Bill Whetten, a Realtor from Mesa, Ariz., came close to the mark when he said, "It's just Middle America come to Washington." Like Whetten, most of the delegates were white males, over 40, who own small-town real estate firms. Almost all are powers in their local communities and many are also leaders of their state Realtor organizations. But these tangible accomplishments seemed diminished amid the glamor and tinsel that surrounds Washington.
For Vince Penza, Monday morning ranked "quite high" in the hierarchy of life's thrills. Penza, who owns a three-person real estate firm in Jacksonville, Ill., was part of a delegation of 50 Realtors who called on President Reagan at the White House.
"As we sat down at the table in the Cabinet Room," Penza said, "I decided to take notes on everything.I was very impressed, awed. I thought of all the people who had sat in the room where we were sitting."
Penza sat in the chair normally reserved for the secretary of energy. "Someone whispered to me to be careful," he said. "They said I was sitting in a chair of a department they wanted to get rid of."
Talking about it later, as he chain-smoked Camels, the white-haired Penza exuded small-town sincerity. "Most of the people here at the conference," he said, "are here because the real estate business has been good to them and they want to give something back to the business."
Penza has devoted his spare time to what he calls "the whole Realtor movement." Like George Babbitt, Penza dreams of the day when being a Realtor is considered a full-fledged profession. "You forget," he said, "that 200 years ago, the doctors were also the barbers of the community."
It's time to meet Jack Carlson, the beefy economist with the wavy gray-brown hair who is the power behind the throne at the association. Carlson, who has a five-year contract for more than $100,000 per annum, stayed in the background at the Washington conference, but his fingerprints were all over the proceedings.
The Realtors considered it a coup when they hired Carlson away from the Chamber of Commerce of the United States in 1979 and gave him an array of new titles: executive vice president, chief administrative officer and chief economist.
What the Realtors got in exchange was a partisan Republican economist who had served in the Nixon and Ford administrations (as assistant director of OMB and as an assistant secretary of the interior) and had made an unsuccessful 1976 bid for the Republican Senate nomination from Utah. They also got a man who had no patience "for the very narrow focus that the Realtors had from the beginning."
Shortly after Carlson arrived, the real estate industry collided with high interest rates, and houses began selling as fast as czarist war bonds. But Carlson refused to allow the Realtors to turn the Federal Reserve into the "scapegoat" for high interest rates.
Instead, he convinced the Realtors that the real problem was the size of the federal deficit. Over the last two years this gospel has trickled down to the individual Realtor. As Whetten, the Realtor from Mesa, Ariz., put it, "High interest rates are just a symptom. They are caused by inflation.And inflation is the result of excessive government spending."
However, Carlson's budget-cutting zeal quickly got the Realtors into hot water with the Carter administration. When the Realtors came to town in March 1980, it was Carlson who had devised the theme of the conference: "The Two-Percent Solution." That was what the Realtors called their proposal for a two-percent cut in the rate of growth of federal spending. To spread the gospel, the Realtors took out full-page ads in 25 newspapers, including The Washington Post.
The Realtors were scheduled to meet with President Carter the day the newspaper ads appeared. For Carlson, it was an important milestone, "the first time I was taking my leadership to the White House."
The meeting was a disaster. According to Julio Laguarta, Carter aide Stuart Eizenstat called the Realtors' ads "the most damnable attack on a sitting president in my memory." When it was over, a shaken Carlson feared that he would have to resign. Instead, the Realtors were delighted that they had finally done something important enough to get a president mad.
A year later, with Ronald Reagan in the White House, the Realtors were close to ecstacy. High interest rates were forgotten as Carlson focused their energies on supporting Reagan's call for $48 billion in budget cuts.
The only problem was that the elected leaders of the Realtors were beginning to bristle over Carlson's new-found prominence. "It wasn't that we were nothing and Jack Carlson came in and goosed us," said the blunt-speaking Laguarta.
John Wood, the president of the Realtors, put it a little more gently: "Julio and I have a lot more to say about the policies of this organization than Jack Carlson."
If the realators were anti-big government when they arrived in Washington, some, like F. Paul Belk of Dalton, Ga., left even more so. Belk, who was hard-pressed to find the money to come to Washington because of the dismal real estate market, took time out from the conference to look up an old high school classmate who now works at the Department of Housing and Urban Development.
"I had to wait 30 minutes to see him," the Georgia Realtor said. "And while I waited I saw four people picking their noses. They weren't doing a damn thing. I asked my old classmate what he did at HUD. He showed me an organization chart with about 15 layers. There were 12 support functions and he was in charge of one of them. I still don't know what he does for a living."
Life in the Emerald City doesn't come cheap. The minumum convention rate for single rooms at the Washington Hilton was $60 a night. Wisconsin Realator Dan Heffron calcualted that the thrill of coming to Washington to lobby Congress cost him about $700.That seems about typical and multiplied by 2,500 delegates it suggests that the Realtors spent more than $1.5 million in coming to Washington. The estimate also fits with figures provided by Austin Kenny, the executive vice president of the Washington Convention and Visitors Association.
Washington is the fourth largest convention city in the country, ranking behind New York, Chicago and San Francisco. Each year 750,000 convention delegates inject more than $300 million into the local economy and that doesn't count airfare. According to the visitors association, the typical convention delegate spends more than $400 in Washington -- about half the money goes for hotel bills and the next biggest chunk, 29 percent, is spent in restaurants.
But convention expenses weren't the only prices that surprised some of the smalltown Realtors. Herb Bergson, from Duluth, was appalled at the cost of housing in Washington. As a taxi crowded with Minnesota Realtors passed the Air and Space Museum on its way to Capitol Hill, Bergson, who owns what he and his wife, Marlene, call a Mom and Pop" real estate firm, began telling the story of his recent encounter with Washington real estate:
"On Sunday, Marlene and I were in Georgetown, looking for a restaurant. We passed an open house and wandered in to see what Washington real estate was like. The house was about 16 feet wide with two tiny bedrooms and a small living room.It overlooked a freeway. You know what they wanted for that house? $115,000! In Duluth, I couldn't sell it for $20,000."
From the back seat of the cab came the voice of Richard Hexum, a fellow Minnesota Realtor. "It's location, Herb, everything is location."
For hotels like the Washington Hilton (or its major competitor, the Sheraton Washington), trade association conventions are the name of the game. sEd Richter, the Hilton's sales director, estimates that about 75 percent of his business comes from people wearing name tags. The Realators were one of about 50 conventions each year that fill the 1,200-room Hilton on Conneticut Avenue to capacity. Once the Hilton was booked the rest of the Realators went to neighboring hotels.
The Realtors' room charges alone brought the Hilton more than $200,000 in revenues; another $56,000 came in Monday night when 2,000 Realtors sat down to dinner in the grand ballroom of the Hilton. At $28 a ticket the Realtors were treated to these staples of hotel banquet food: onion soup, salad, stuffed chicken breast and ice-cream roll. The guest speaker, OMB director David Stockman came free. It was the least he could do because the Realtors spent most of their time in Washington urging their home-town congressmen to support Stockman's budget proposals.
As Stockman curried favor with the Realtors by claiming that Jack Carlson's "Two-Percent Solution" was the inspiration for the Reagan administration's economic policies, the mood in the grand ballroom of the Hilton was euphoric. Again and again, the Realtors roared their approval for cuts in the budget. There were, however, a few dissenters. One state Realtor official looked stricken as he fled the hall. "It's like Munich in 1933 in there," he said.
The Realtors pulled out all the stops when they hosted a $40,000 cocktail party for 3,800 in the grand ballroom of the Hilton on the closing night of the conference. The featured guests were about 160 members of Congress and Federal Reserve chairman Paul Volker.
Surrounded by more than a half-dozen bars dispensing mixed drinks, buffet tables laden with huge mounds of roast beef and several examples of the high art of ice sculpture, a few of the delegates were a bit offended by all the razzle-dazzle.
For example, John Blomquist, a Realtor from St. Paul, asked, "What if the Realtors, threw this party and nobody came?" Added Sandra Lee from Minneapolis. "This sort of thing is just not the Minnesota style." Afterwards, some of the leaders of the Realtors would also wonder if this annual event had not gotton out of hand.
But most of the Realtors were enjoying the party. The men were in dark suits and the women used this raucous occasion to wear the long dresses that they had dutifully packed for the conference.
What was striking about the party was the scant interest that the Realtors paid to Volcker, the man who is at least partly responsible for the high interest rates that have devastated their industry. No one tried to shake Volker's lapels and shout, "You've ruined my business. I can't sell houses because of the high interest rates. My wife left me and I'm considering suicide. And it's all your fault."
Instead, the 6-foot 7-inch Volcker had to smile politely as he endured comments like this one from a tipsy California Realtor: "You're some big guy. I bet you don't take crap from nobody."
Volcker himself couldn't resist a bit of puckish humor at the expense of Myra Goldwater, who was wearing three long strands of perfect pearls and enough jewelry to buy a small house in Duluth. Peering down at Goldwater's name tag, giving her home town as Palm Springs, Calif., Volcker said, "Ah, Palm Springs. You must really be suffering out there."
Few of the Realtors begrudged the cost of the four-day conference. Some, like Myra Goldwater, could easily afford it and others, like Doris van Hoozer from Jonesboro, Ga., believed that the cause was worth the cost. "Washington is not cheap," she said. "But we're here because we care about America."
It seems heartless to try to puncture this kind of sincerity. But despite their zeal, there is no hard evidence that Doris van Hoozer and her 2,500 fellow Realtors swayed any votes on Capitol Hill. Too much emphasis was put on the battle of the budget where the Realtors were lost in a cacophony of other voices. Too little attention was paid to bread-and-butter issues where 2,500 Realtors might have made a difference. It isn't glamorous to lobby Congress on behalf of more favorable tax treatment for apartment buildings, but parochial questions like these determine the bottom line for many Realtors.
Al Abrahams claimed that the purpose of the Realtors' Washington conference was "to develop the leadership cadres of the organization." Perhaps. But, in an likelihood, there was a hidden agenda to the Realtors' conference as well.
In June, the Realtors will be moving their 87-person Washington office to their own $8.2 million office building on 14th Street NW. Sooner or later, hired guns such as Abrahams and Carlson have to justify their salaries to the rank-and-file Realtors who ultimately foot the bill.
This helps explain Washington's booming convention industry. Events like the Realtors Washington Conference are little more than Potemkin Villages, carefully constructed facades designed for the primary purpose of dazzling and delighting out-of-town delegates. And, in this case, it worked like a charm.
Wisconsin Realtor Dan Heffron, for one, will be talking all summer about his first trip to Washington. " I get off on the lobbying," said the 33-year-old Heffron. "It's been clean, it's been effective and it's been fun."
Now here comes the clincher, the reason why trade association executives never need fear the wrath of their members.
"I'm from Sauk City, Wis., population 5,000," said Heffron, with wonder and amazement in his voice. "Today, I've been in to see Congressman Henry Reuss and Congressman Bob Kastenmeier."
To Reuss and Kastenmeier, it was another handshake on a busy day.But to Heffron, it was a memorable event transforming him into someone important. George Babbitt would have been envious.