RISMEDIA, October 21, 2010—Stefan Swanepoel, noted expert on real estate business trends and social media was the keynote speaker at the recent Council of Multiple Listing Services (CMLS) annual conference in Chicago. Within the first 20 minutes, Swanepoel imparted one very important statistic—the age of real estate agents nationwide.
According to the National Association of Realtors, real estate agents in the United States in 2000 were pretty evenly split between those over and those under 40 years of age. In 2010, the number of agents over 40 outnumbers those under 40 nearly 2-1. This statistic has major implications to the entire industry, which I have attempted to summarize below.
For agents over 40 – Many are the old guard who survived several storms over a long career, not the least of which was the massive influx of younger agents before the crash. The over-40 agent crowd is now working with clients much younger and likely more tech-savvy than they are. The over-40’s have had to embrace technology, and prepare themselves to communicate with their clients via media that did not exist just a few years ago, much less when they started their careers. Only a select few have been able to continue doing business without adopting these new technologies.
Perhaps this speaks a lot to what older agents bring to the table, namely years of experience in real estate. Understanding the market and local communities, knowing how to prospect, having a rich pipeline of contacts, good business instincts, and just good old-fashioned customer service. While many have adopted new technologies to compete, providing the best possible service to their clients is not a new idea, and younger agents who fail to include service with technology did not last.
For agents under 40 – So many agents jumped into real estate when the market was booming. Those remaining embraced new social media and other technologies fervently, leveraging them to grow their business. These are the agents you might see at bar camps, tech fairs and all over the Internet blogosphere; in fact, many do more social media events and consulting than transactions. Still others may have had a good mentor who taught them the important non-tech basics: hard work, good service, continuous prospecting.
As the over-40’s retire, the under-40’s have the opportunity to grow significant market share. The ability to embrace new technologies and means of communication at a more rapid pace than older agents puts them at an advantage with younger, more tech-savvy clients. But ignoring the service aspect will be at their peril.
For MLSs – The lack of new entrants into real estate means a shrinking membership for most MLSs nationwide. And this translates directly into shrinking revenues from member dues and fees. Evaluation of core services and the pressure from members to add value in the face of tightening budgets and downsizing staff is a cause for great concern.
In response, many MLSs are looking at a tiered service model to replace the old flat-fee one. Unproductive agents use fewer of the services provided, but generate disproportionate service costs because they lack familiarity with these systems. Many MLS executives feel certain segments of their membership would pay more for services if the trade-off is fewer agents in the marketplace.
Ultimately, MLSs must decide what kind of service provider they want to be. Offering a higher level of service cannot happen at a discount membership rate. The 80/20 rule holds very true, and the 20% of their membership doing 80% of the transactions will have a lot more say about what kinds of services their MLS should be providing.
For vendors – With MLSs trimming their budgets and re-evaluating core services, vendors must add value in the face of downward pressure on price. MLSs who migrate to a tiered service model may be less willing to pay for services on a per-agent basis when factoring the entire membership count. Vendors may offer more services on a per subscriber model, with the MLS acting as a marketing partner. Revenue sharing may also be a popular model in the years to come.
For consumers – Consumers are looking at a thinned herd of available real estate professionals to choose from. While real estate has traditionally been a business that rewards volume over service level, there are good choices of new brokerage models and different levels of service from which consumers may select, even with such high agent attrition. Many agents communicate effectively via the medium of their clients’ choice.
Consumers also have access to more real estate related data and information than ever before. They rely less on agents to walk them through the remedial parts of the process; the dialogue can start at a more advanced level and go into more detail about the specifics. This results in a more informed and confident client who can potentially have a much more positive experience with the right agent. Perhaps enough experiences like this will raise the public perception of the real estate industry and its professionals as a whole.
For individuals considering a career in real estate – One more stat from Swanepoel’s presentation cited more real estate schools have closed in the last five years than in the 20 preceding years, so it’s easy to see why so few young people are entering real estate out of college. And maybe the remaining agents are fine with that. Swanepoel says today the MLS is in the best position to educate and train, that the major franchisors are not adequately filling this gap (I would contend there are notable exceptions to this). But as MLSs re-evaluate their roles, will education take a back seat?
Perhaps the newer brokerage models who see a service gap ignored by traditional brokerages will seize the opportunity to attract younger agents. Matt Dollinger of Chicago’s @properties presented an entire slide show at CMLS 2010 on reexamining the meaning of leadership, and the importance of both providing good service and resources to the customer, and agent mentoring.
Garry Wise of the Good Life Team in Austin, TX once fired an entire staff of top-producing agents, and didn’t lose a step. Why? Because relying on experienced “lone rangers” who focused on volume over service hurt the brand The Good Life Team was building. Hiring younger agents dedicated to good service and willing to adopt their unique system and culture proved a much better strategy.
@properties was a 2009 finalist for the Inman Most Innovative Brokerage award and the Good Life Team won it in 2010. Maybe Matt and Garry are on to something and companies that test traditional perceptions of the real estate brokerage may attract younger professionals back into the industry.
Ultimately, the entry of new agents into real estate will be determined like anything else. Simple market forces of supply, demand and consumer choice will decide which agents come and go, and the rest of the industry will respond accordingly.
Rich Bailey is director of business development at WolfNet Technologies, LLC.
For more information, visit www.wolfnet.com.