Gen X, Gen Y, And the End Of The Traditional Real Estate Business Model
April 27, 2008
With the median age of real estate agents being 52 years of age (source NAR), new Realtors hoping to make their mark in the real estate business are casting aside conventional wisdom.
New Real Estate Agents Seeking Gen X And Gen Y Buyers Break From The Mold
New real estate agents, cognizant of the fact that 84% of homebuyers start their home buying journey on the Internet and that the median age of first time home buyers is 32, now realize that what may have worked for the elder-statesmen of the industry is not what their clientele are looking for.
In a demographic wherein 50% of which use social networking websites, the axioms of traditional real estate sales is not viewed as being prudent.
Young agents are now finding that chaperoning prospective buyers from house to house and acting as the veritable liaison between the Buyer and Seller is not generating sales among the Gen X and Gen Y hip and technologically advanced home buyer.
“People, especially my peers, aren’t looking for a ride to the property or a go-between; they want to IM me to find out how big the basement is,” said Lisa Johnson, 33, who works for Coldwell Banker in Haverhill. “They often have more information on the properties than most realtors. They don’t want a new friend; they want answers fast and will make decisions quickly when you provide them. I know this because I’m the same way.” (As reported recently in the Boston Globe.)
It is becoming more and more apparent that a fresh, younger, breed of real estate agent is in great demand in an aging industry struggling to keep pace with a market populated with an emerging younger homebuyer. The dilemma? The real estate industry continues to get older while the industry’s consumer base begins to skew younger.
This widening gap poses a great conundrum for traditional real estate agents.Younger prospective home buyers seek to do their own research, on their own time, and in their own manner. They expect a real estate agent to “chill-out” and just be there when they are ready. They definitely do not want to be involved in any form of hard sell ethos.
The recent run-up in agents entering the business in the boom times of the last few years had little effect on closing the age gap between younger agent and older agent.
“The rapid rise in the number of agents in the early years of this century has done little to affect this median age, as the bulk of new entrants are late career transfers taking either early retirement or those made redundant by recession and technological change.” (Stefan Swanepoel from RE Trends)
The gap between the traditional real estate agent and the Gen X, Gen Y homebuyer is much larger than simply an age problem. It is an impediment of even greater proportions.
“Clearly these are two different generations with their own concepts of value, preferred channels of communications and preconceived views of how the world works. Often the sales methods most comfortable to the agent, which have worked for that agent for years, fall flat with younger buyers and sellers, who see the market and the sales process differently. ” (Stefan Swanepoel from RE Trends)
In an October 2007 study, Deloitte Research urged the real estate industry to attract new talent from the Gen Y demo (those born between 1982 and 1993), or the industry would not only not be in a position to service this market, but that the industry would begin to see a marked decrease in real estate professionals in the very near future. The Deloitte study states that nearly 60% of those in the real estate profession will be 65 years or older by 2010.
Swanepol says this might not be as bad as one may think. “Technological change has increased agent productivity so the number of agents necessary to service the market will be less. But demographic change is going to leave a large hole in the industry labor force.”
The Deloitte study mentions three salient admonitions to those running real estate businesses:
1. Generation Y is coming into the market with a set of values that differs from their predecessors’. This “value set,” which includes flexibility and work/life balance, are key career motivators for this generation.
2. To successfully recruit members of Generation Y, real estate companies must develop and communicate their vision and differentiate themselves from their competition. Based on Gen Y’s interests, companies should promote their sound values, technologically advanced workplaces and global scope.
3. Real estate companies need to adjust their talent management strategies to better suit the needs of the incoming workers, developing practices that add the most value to their employees — the “customers” of this process.
The National Association of Realtors, the industry’s trade organization must have missed all of this information. Just recently the NAR in an attempt to bring the traditional real estate office into the technological era, completely fell flat on their face with the introduction of Realtor Confidential.
This is clearly not going to help the traditional real estate company reach the Gen X or Gen Y buyer, nor the type of person who wants to be an agent who happens to be in that same demo.
How many brokers who will read this are actively recruiting young real estate agents who are well versed in IM, text-mesaging, social networking, Twitter, My Space, Facebook and similar new technologies?
Need proof of how this younger generation rolls out there? After working in the business for over three months utilizing traditional, somewhat obsolete methodology, Johnson decided to kick in what she and her associates regularly utilize to communicate.
“Instead of face-to-face or phone calls, I now stay connected to my customers the way they prefer, which tends to be through chat and text messages,” she said. “I even started working with some buyers and sellers through online news groups.”
It certainly worked. From toiling with no sales for months, Johnson has risen to Rockstar status. She has had so much success selling homes that she was named her office’s “Rookie of the Year”.
One of the reasons that younger agents like Johnson are needed is that they bring a fresh perspective and innate knowledge of the Gen X and Gen Y buyer or seller because they are well…in that demo.
While older, traditional agents have to rely on second hand information to understand what young single women are looking for, or possibly what the needs of a buppie may be, or possibly what appeals to a gay buyer or seller, the younger Gen Y agent already knows and more than likely has friends and many associates in those demos.
Accordingly, the Gen Y market also wants agents who are honest and open with them. The question they really want to know? Why are they paying so much commission?
I’ll leave that question for another time, but suffice it to say, this generation is viable. They know what they want and they want agents that can serve them in the manner they expect to be served.
Lisa Johnson and many like her understand this and they are breaking from the mold of conventional wisdom and are not looking back.
She recently sold another house on a street where many others remain on the market, sitting idle waiting for someone to market them. Her secret?
“The buyers saw a posting on my blog and came to our open house that weekend and then wrote their offer,” she said. “No blog post, no buyer. Technology sold this one.”
Amazing, is the wisdom out of the mouths of babes!
I agree, we older agents need to embrace technology in order to capture Gen X and Y clientele, and we feel we have done that. My wife and I are both over 50 and are knee deep in involving tech in our business model. We IM, we use Facebook, MySpace, Twitter, Plaxo, Tumblr, Digg, Delicious, StumbleUpon, Craig’sList, and a number of other social networking platforms, as well as do heavy volumes of internet marketing for our listings. We even Skype our kids and grandkids in Texas and California almost daily to keep up with the young one’s latest escapades. As I write this, my wife is writng an offer with a Gen X couple (he with long hair, she with piercings) in our home office, and we have several other Gen X and Y clients either looking for a home, awaiting word on an offer or ready to close. We’ve been heavily involved with PC’s and the internet since the early 90’s, have kept abreast of the advances made over the years and incorporated as much as we can into our business. We know many established agents in our area who can hardly turn on a PC, let alone use it to converse with their clients. Their business suffers accordingly, and they’ll probably wish they had taken that Internet 101 class when they had the chance. For our part, we look forward to cultivating a healthy relationship with the Gen X and Y crowd in our market for years to come.
Way to go Wayne!
As you are near Choate and not too far from Yale and other bastions of the Gen Y area..your command of this technology will be of great value!
I agree. I got so fed up with the “cookie cutter trash” sites with templates that so many of these real estate website companies offer (examples like z57, RLS2000, Advanced Access, etc) that I decided to just sit down and write my own. It’s not perfect, but hey, at least I’m trying to do something different and easier, instead of spending $400 plus a year to wind up being like “everyone else”. At least I can experiment and try. I was hesitant about Meebo and the social networks at first but heck, why not? And it’s practical; better than driving around and wasting gas at $3.25 plus a gallon. I have a couple of blogs and such, and add more stuff. I’ve been involved with computers since their “infancy” when computers were bought from Radio Shack with cassette tape drives (remember the TRS-80?). When MLS became REALLY computerized I remember using a Radio Shack “Deskmate” computer (no hard drive at all!). Boy was that fun. We’re talking mid 80’s..
In spite of everything let me add computers and all these networks are a tool; if people don’t trust you and you don’t know your job, all the websites and systems in the world won’t help you.
This has to be the most ignorant article I have read in quite some time and feel dumber having done so. Just another stab at the realtor community with an underlying frustration on commission. You make it sound like the entire transaction is as easy as finding the house online and then clicking the “bid” button on Ebay. All that and Rockstar status too.
The problem with your argument, is most Gen X and Y’s can surf all day with no problem. When it comes time for negotiations, financials, contracts and true values - the majority are completely lost. Which is why they hire us to begin with. Text messaging, email is nothing new under the sun. Most of the older agents I know have been using this for some time. Agents are very adapt in changing with the flow of any market.
But hey! I’d love to elaborate more, but I have an appointment with a couple of Y’s that are financed to the moon with a second mortgage and really need to sell their home - probably buying all that technology you speak so highly of. I guess my advice tonight should be “Write a blog.”
[…] today’s show we kept the theme from a recent Barry C post titled, “Gen X, Gen Y, And the End Of the Traditional Real Estate Business“. We were joined by a couple of real estate agents who exemplify the future of real estate, […]
Okay folks….I’m a so-called realtor. I don’t take offense to any of these comments. What you have here are different generations of folks who have a preference for how they want to do business. It’s like arguing over whether a person is right or left handed. It really doesn’t matter. Point is, if you use technology to streamline/simplify the process, you save time…you can talk to more people…you have a ’system’ in place. If you’re old-fashioned, you put more into the relationship part, which most people find a good thing….like going to grandma’s house when you were a kid. (Yes, she’s old, but there’s nothing like hanging out with grandma..no matter how lame, the love is still there.) It doesn’t matter how you run the race, just that you get to the finish line. Tortoise or hare you’re still in the race. As I always tell folks, it’s all about the relationship. People don’t want to be “SOLD”, they want your ‘take’ on what’s in it for them…cost savings, pros/cons, etc. It’s human nature. You can expect droves of agents to bail out of the industry in the next few years. Not because of some inability to communicate or working style, but because our economies are international vs. domestic in nature. Real estate may be considered ‘local’, but buyers come from all over the world now days (not just within the U.S.). Step out of your comfort zone and experiment. Don’t be afraid to be innovative. Technology is a tool, nothing more. People & lifestyles are your business, not sales. — SIGNED: K.S., A grateful realtor in HOUSTON, TEXAS, 4/29/8, 10:59AM CST WED
Technology does help to grab attention and is fundamental as a communication vehicle. But the qualities of honesty, integrity, market knowledge and sales savvy cannot be overlooked.
Just my three cents, but I am a Gen X’er and am the oldest sibling in my family, the rest being up and coming well pedigreed and hooked-up Gen Y consumers.
If your a phoney- they will see thru.