Editor’s note: In a recent four-part series, Imprev Inc. CEO Renwick Congdon shared his vision how real estate brokerages could change the way firms recruit and retain talent by employing a business model in which brokers would invest in their agents. In this guest piece, Congdon offers advice on recruiting younger agents.
In the last 15 years, the number of Realtors in their 40s has dropped by a third. So it’s no surprise that “recruiting younger talent” is the No. 1 business concern expressed by top real estate executives in the latest Imprev Thought Leader Survey for the second year in a row.
In digging deeper, what we found is alarming: Some 77 million baby boomers will retire within the next 15 years, but only 44 million Gen Xers — the next-younger population group in their 30s and 40s — are available to take their place. The competition from other industries for this group is already beginning to gut the industry.
The good news: The real estate business can offer this generation exactly what they are looking for. However, to do this we’ll need to develop new, creative structures and business models that will attract them to our industry.
Here’s what the research says:
By a 2-to-1 margin, members of Gen X would rather own their own companies than be senior executives in large firms: Commissioned salesperson doesn’t even register. In fact, today 1 in 5 small-business owners in the United States are in their 30s and 40s, and the business start-up rate for Gen Xers is three times that of older age groups.
The potential fit between what Gen Xers want and what real estate offers is uncanny: Research shows they’re highly adaptable, independent, productive and motivated to produce high-quality results. They want autonomy, thrive on instant gratification and covet recognition. They’re looking for flexible hours, see themselves as a marketable commodity, and are technically competent, having grown up with technology. Wow!
Give it to them
We need to give them what they are asking for: the ability to build their own companies. By providing a structure that allows them to grow complex businesses inside brokerages, we can attract this new generation. But to get there we need to make fundamental changes, not just put lipstick on it.
What do I mean by this? One example: It has become very common to refer to agents as “entrepreneurs.” Since agents are independent contractors, “run” their own businesses, and the term “salesperson” has become unpopular, we call them entrepreneurs.
Entrepreneur comes from the Old French word “entreprendre” when one is “willing to take on more in an activity that involves many people and is often difficult.”
A modern definition: “A person who organizes and operates a complex business or businesses — hire and manage employees, make payroll, etc. — taking on greater-than-normal financial risks, and is willing to risk loss in order to make money.”
It’s that last part that differentiates a true business entrepreneur. It’s why the old model of a commission salesperson — no matter what it is called — has not attracted enough Gen Xers.
Providing a structure that offers the ability to build a company within your brokerage will attract today’s entrepreneurs — young-ish, let-me-run-the-show types who already may have kicked up a small success storm in another field entirely — they know how to build a business and want to own something.
The risk is imminent
The real estate business is aging out; that should have been our first clue. Tens of thousands of experienced, reliable producers are approaching their retirement.
If we don’t fix our industry’s problem ourselves, someone from outside real estate is likely to snatch this opportunity away from us. We already gave lead gen away and now spend hundreds of millions of dollars buying those leads back (another topic worth discussing).
Love it or hate it
The folks who read my guest columns and sat in on this summer’s Connect session discussing the broker as investor ended up in two camps: Either they loved it or hated it. But both camps were talking about it, and that’s a start.
I want to be clear: The goal here isn’t to force anyone to take sides; it is to foster positive change. I am not advocating a one-size-fixes-all model, LLC or otherwise. It’s about real estate executives having a real dialogue — talking to each other — to find ways we can CHANGE what we’re doing now to attract talent as an industry and avoid the consequences if we don’t.
Let’s get creative and take the kind of action that’s necessary to compete for the next generation.
Renwick Congdon (@renwickcongdon) is CEO of Seattle-area-based Imprev Inc., a marketing technologies company he founded in 2000. A serial innovator and entrepreneur, Congdon serves on the board of directors of the Seattle chapter of Entrepreneurs Organization, a network of more than 8,000 business owners in 40 countries.