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Gen X, Gen Y, And the End Of The Traditional Real Estate Business Model

 Real Estate Radio USA | Gen Y Homebuyers

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!

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  • Is Your Broker Profitable? – “Rent-A-Broker” Shops

  • 30 comments

    30 Comments so far

    1. Mariana April 27th, 2008 1:01 pm

      wow. My first “I love Barry” post on BHB. And I thought this day would never come …

    2. Anthony Longo April 27th, 2008 1:41 pm

      Read this today in the Globe…awesome article. “Traditional Real Estate” of the future….

    3. Hunter Jackson April 27th, 2008 2:03 pm

      Being a member of these generations myself (I am 22) I do find it different to work with the non tech-savy clients and even other agents.

      Half my clients do not have email, cell phones etc. Very few ppl have heard of twitter here. Of course, people I went to high school and college with have facebook…but that is the extent.

      Input via Blackberry Mobile

    4. Eric Bramlett April 27th, 2008 2:08 pm

      I am a Gen Y broker (born in 79, been in real estate since 2003.) I’ve always been turned off by traditional sales techniques – and I think that many gen Y buyers are the same. When I bought my car, I found the best deal online, negotiated it over the phone, and flew to Houston to pick it up. I refused to “come down to the lot to talk about it.” IMO, Gen Y buyers can smell cheese a mile away, and don’t like the scent.

      I take it for granted that I can research and find pretty much anything online, instantly. Advancements in communication – cell phones w/ text messaging & email capabilities primarily – make it absurd to think that you shouldn’t be able to get a hold of any professional within a very short period of time.

      So…we have ready access to a wealth of information & have very strong communication tools. Really, this only means that we (as brokers/agents) are able and expected to provide better service – better, as in more complete and prompt.

      Do you have to be into facebook, twitter, blogging, myspace, digg, reddit, etc. in order to succeed with Gen Y buyers? I don’t think so. There’s no way I would search for an attorney, doctor, CPA, etc on a social networking site. However, participating in online niche communities (like city-data.com) is a legitimate and effective way to build new relationships.

    5. The Harriman Team April 27th, 2008 2:11 pm

      Well, my first reply disappeared into the blog ether, so I’ll try again. I basically said I agree with Barry; my wife and I are both 50+ and we connect very well with the Gen X and Y clientele in our market. Both yesterday and today we wrote offers for mid-20′s couples buying their first home and will be writing another in an hour or so. We use IM, Facebook, MySpace, Twitter, Plaxo, Tumblr and a host of other social netwoeking sites to reach our clients, and we market heavily on the internet for all our listings, through the traditional channels like Realtor.com, Trulia, CraigsList and our broker’s and our own web sites, and also through RealBird, Postlets and vFlyers and RealEstateShows.com. We know several established agents who barely know how to turn on a PC, let alone connect with their clients on the web. Their business is suffering accordingly and I have a feeling they’ll be wishing they took that Social Marketing 101 course when they had the chance. For our part, we’re confident we’ll be grabbing the Gen X and Y crowd for years to come.

    6. Barry Cunningham April 27th, 2008 2:18 pm

      Mariana.. thanks..see…I am not all bad…:)

    7. the naked realtor April 27th, 2008 2:30 pm

      Barry – Spot on…well sort of….I remember my grandfather saying “you can’t teach an old dog new tricks”. Well, I don’t think Gen X and Y are looking for a dog at all.

      The Gen X and Y folks are looking for the same thing that their parents and grandparents were seeking. They want an honest agent that will work for them in a style that is comfortable to them.

      I think the problem is that the NAR continues to support the myth that one size fits all. They continue to encourage agents to set firm schedules. They see the best way to success through using a cookie cutter approach.

      You could not survive in the past if you demanded that all clients fit your mold and style. You will not be successful in the future if you try that model.

      A good agent learns what is the best way to communicate with their client and uses that with that client. It is not the same for every client.

      The things that remain the same are the foundation of any good agent whether it is 1907 or 2007. A good agent knows their job. A good agent understands fiduciary responsibility, a good agent knows how to seperate fact from fiction and emotion from reality. A good agent can take measure of a client and communicate with that client.

      Same sun up there since who knows when. There is nothing new under the sun. Sales people have always had to package their skills in a fashion that allows them to share their knowledge.

      Nice post, but it targets symptoms and not the disease.

    8. Cari McGee April 27th, 2008 3:43 pm

      Ditto Mariana!

      My broker (54-years-old) is always pushing phone calls and door knocking because that’s what worked for him. The elders in the office scoff at my blog and the time I spend on the Internet.

      But I just took my second listing as a direct result of blogging, and the sellers have been in his generation, but they must realize the buyers are in mine (I’m an X-er).

    9. Barry Cunningham April 27th, 2008 4:02 pm

      A lot of successful agents and brokers have pushed cold calls and door knocking and it works very well for them.

      I think some don’t realize that it has a lot to do with the niche or farm area you are pursuing.

      Just as the mantra says, real estate is local, it also could be extended to this is not a one size fits all business.

      great job Cari

    10. Brian Brady April 27th, 2008 4:42 pm

      I’m an X-er and I’m clearly a social media marketer. Some questions for thought:

      Do you think that generational habits change as they age?

      Tt’s easy to say that “print is dead” but I see 26 year olds reading the Sunday Union-Trib. It’s easy to suggest that texting is the new communication tool but throw a gaggle of kids into the mix and the telephone becomes all the more relevant.

      I’m not looking to be confrontational here. Does anyone think that perhaps the lustre of the SMM tools will dull a bit as these generations age?

    11. Tom Vanderwell April 27th, 2008 5:11 pm

      Every time I come to BHB, I learn something more. As a 43 year old 20 year veteran on the lending side of things, I’d love to know if anyone sees that same thing happening on the lending side?

      What do you think?

    12. Eric Bramlett April 27th, 2008 5:12 pm

      I think the SMM tools will evolve w/ the generation(s) that use them. There’s a best use for each communicative tool.

    13. Sean Purcell April 27th, 2008 5:55 pm

      Barry,

      Great post. I agree with you (and the commenters) that a good agent evolves their means of communication, while the integrity and professionalism that is being communicated changes very little.

      Here’s a different take on the generational gap that appears to exist: a psychological aspect. It is my understanding that one of the unique dynamics of the Gen Yers is their bonding with their parents (the Boomers). Yes, the Gen Y’ers access their information and communicate using newer and more technologically advanced tools. But they reportedly make very few decisions without the blessing of their parents. As a matter of fact, the motto lately has been:

      If you want to do business with Gen Y, you better make sure their mother likes you.

      To the degree that this is true, it might be of benefit to the older agents in that they can relate historically to the people that are making (or at least blessing) the Gen Y decisions.

      Is there any anecdotal evidence out there one way or the other?

    14. Barry Cunningham April 27th, 2008 6:02 pm

      Hey BB..what will dull is possibly the “current” SMM tools. As we all know what is here today is obsolete tomorrow. The challenge will be to keep pace.

      I don’t see your comment as controversail as much as it is your opinion. As is with most of my articles, I provide research analysis from very credible sources. The conclusions are for the reader to reach.

      Is Deloitte wrong? That’s for the reader to dispute or discredit. I am SURE some here will, but absent real substantive data to the contrary it’s very hard for a reasonable person to ignore the wave of research and data.

      To me, as I continue to suggest inmy posts. It’s not about the here and now. It’s about tomorrow.

      So no, I don’t see you being controversial at all.

      FYI..other than if I am catching a plane, I haven’t bought a newspaper in ages.

      By the way…thought you were going to call me?

    15. Louis Cammarosano April 27th, 2008 6:26 pm

      I think the age factor is overrated.

      Most of the contributors on this board I would guess are close to or over 40 years old and could be considered, a term I hate, “tech savvy”

      The ability to twitter or IM is not the preserve of the prepubescent.

      I think that because many realtors are not full time or not that active they have not adapted the same up to date business tools as their counterparts have in office jobs. (witness the NAR video of the “cutting edge” realtor office)

      Most of today’s tech innovations are simple to use.

      Many realtors don’t bother, but I don’t think its because of their age, but rather their temperment.

    16. Dave Phillips April 27th, 2008 6:38 pm

      Nice work Barry! I think this was the most important trend in this year’s Swanepoel report. It will only become more pronounced over the next 10 year as Gen Y start to buy homes in full force.

    17. Brian Brady April 27th, 2008 6:42 pm

      “The ability to twitter or IM is not the preserve of the prepubescent.”

      Leave it to Louis to give me the opening line for Unchained.

    18. Barry Cunningham April 27th, 2008 7:23 pm

      Thanks Dave…I read the report and then the Globe article and then the Deloitte study and the information was compelling to say the least.

      Louis…we have to see if Greg can give you some time for your stand up routine.

      Sean…did you have a chance to review the Deloitte study?

    19. Louis Cammarosano April 27th, 2008 7:42 pm

      Brian it should be “The ability to twitter or IM is not the SOLE preserve of the prepubescent.”

    20. Louis Cammarosano April 27th, 2008 8:14 pm

      Barry
      I don’t think Greg finds my “chokepoint” pay per gag humor amusing.

    21. Louis Cammarosano April 27th, 2008 8:32 pm

      Barry it is true that sometimes older people DO NOT adapt to new technologies. But I think this is the exception, not the rule

      My Grandmother was never big on new technologies like the “Hollow Statute” that was all the rage after World War II.

      For the last thirty years of her life she lived in dread whenever it rang, chosing to yell down the hall to anyone who would listen to inform them that it was ringing.

      If forced to answer it herself she would inevitably ask
      “halloisdatyou? and hold the receiver out towards her audience with a bewildered look on her face pleading for someone to take the Hollow Statute from her.

      Being in the grandmother business did not require her, however, to answer the phone and she did a wonderful job without ever mastering the telephone.

      Realtors, if they want to earn business don’t have the luxury of not learning new technologies.

      But I don’t think age is the impediment -its a mindset.

    22. Sean Purcell April 28th, 2008 8:14 am

      Barry,

      Just finished the Deloitte report. Interesting report… not too controversial as far as I am concerned. They reported the generational trends that are well known among anyone paying attention and they pushed their “patented solution”: Develop-Deploy-Connect.

      There are the usual “suspect” stats, but it is difficult to find a report or white paper that does not have them (statistical analysis is a “dead” art form). What I found interesting was the lack of relevance. The conclusions of this report were primarily directed toward property management, commercial real estate, builders and other large, corporate entities. It had little impact on residential real estate, although anyone practicing residential real estate had better look at the trends and conclusions and look for ways to make them relevant to the industry. (I did think that the conclusions could be relevant to residential mortgage companies, mostly because those companies tend to follow a more traditional business model.)

      A couple of observations:
      - The report appears to decry the loss of experience inherent in losing the Baby Boomers but I wonder if that is not a good thing. Technology and RE practices seem to have passed most boomers long ago. Do we want them passing on “traditional” prospecting, marketing and business practice systems?
      -Their “Traditional Talent Management Model” appears to substantiate one of Greg Swann’s primary problems with traditional real estate: the “tax advantaged commission” that incentivizes brokers to put butts in seats and not much else (not sure if that is the exact phrase Greg uses – Greg: please correct as needed).
      -Bottom line: conclusions indicate to me that residential real estate is doing it wrong (no surprise); need to either teach entrepreneurial skills (as opposed to Deloitte’s ideas) or teach Deloitte’s ideas and hasten the Super Agent model that I described in my post on Disbrokeration.

      This probably should have been a post on it’s own but the Deloitte study is your entry and I want to keep the string intact.

    23. Brad Rachielles April 28th, 2008 9:23 am

      Barry – Good post. You are right on point. In a post today on BHB, Chris Johnson reminds us in a discussion encouraging reexamination of our marketing methods, that there are a “Million ways to skin a cat”. We should also remember that there are a million cats to be skinned. There are more and more Millenials (“Y”s) and Gen X clients every day that fit this discussion, But I also agree with Teri Lussier in another post that it is good to learn the techniques that work with demographics that have more homes to sell right now…… Boomers and before, the majority of whom are not 2.0 or social networkers.

      Todays true professional will develope appropriate communication and marketing appropriate for the client.

    24. The Shef April 28th, 2008 10:12 am

      The Generation X and Y marketplace and spending power is huge. This is a 2.4 trillion dollar demographic in terms of spending power. The next few years will without a doubt differentiate the “old money” real estate agents from the “up and comers”

      While you don’t have to learn and keep on top of every last technological breakthrough, you do have to be aware of it. (Sometimes it feels as humiliating as playing a 10 year old in a video game!) Some of the things that I have found to be useful include:
      1. Hire a high school kid to keep up on your tech stuff. The myspace, facebook, etc. is best figured out by someone who still has zits. It is alway a great practice to hire those who play at what I would need to work at.
      2. Find out from the younger generation what they are looking for. Rather than saying “I have a great product, let me tell you why you need it.” You would be time and money ahead by realizing what the market is buying and filling that void.
      3. Offer free classes or networking events. You want your individual brand as a realtor to stand out. There are many ways to do this. If a client feels connected with you, they will do business with you. If they feel like they don’t know you; they’re gone.

      For many other tips on branding and success, visit my site at http://www.theshef.com

    25. Barry Cunningham April 28th, 2008 11:43 am

      Brad you wrote..”it is good to learn the techniques that work with demographics that have more homes to sell right now…… Boomers and before, the majority of whom are not 2.0 or social networkers.”.

      My mother always told me to finish what I had on my plate before I asked for seconds.

      Don’t you think it is a bit more prudent to be seeking buyers for the existing food on the table (current inventory), before looking for something more to eat (more inventory)?

      Seems to me there’s something really wrong with the focus of today’s realtor. Most are seemingly taught to list..list..list…while few are well versed in the buy..buy..buy side of things. Which side does it make sense to work on in this market and the foreseeable market?

    26. Barry Cunningham April 28th, 2008 11:44 am

      The Shef is again cooking up something special! What a huge marker Dave. It can not be ignored nor should it be!

    27. Brad Rachielles April 28th, 2008 4:55 pm

      Barry – Your point is well taken and certainly is correct for the short term, at least until this portion of the current business cycle hits bottom. Then the scramble starts to build skills that will satisfy all generations of client – buyer or seller – ergo the “true professional”.

    28. James Boyer April 28th, 2008 6:59 pm

      It is likely going to take a few more years for significant numbers of REALTORS in most markets to get these ideas and start implementing them. Good for those of us who get it now, good for those who get it later, bad for the rest.

    29. Joe Hayden April 29th, 2008 11:54 pm

      Well, looking at that picture the first answer that came to my head was “refrigerator magnets”…But, they would need a friend to read them…

      I just don’t think much has changed other than the delivery method (internet). People wanted to be treated with respect, given an honest opinion, and stay on budget. The amount of info available is almost damaging to some as it detracts from the basics and what tends to work.

      I see it as learning a new language, but “help me get a fair deal on a home” is the same no matter what tongue you employ…

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