As you may have noticed, most CRE agents are white males. While the percentages vary depending on the study and what positions/specialties are included, females represent anywhere from 10% to over 40% of the work force with minorities representing around 5%.
They’re also old – and getting older. Between 2002 and today, the median age of all real estate agents has climbed from 52 to 57.
There are all sorts of explanations for these statistics. Bias towards women and minorities not only from brokerages but from clients. Family dynasties, typically white and mostly in large cities, dominating the market with their progeny and pals. The fact that if they choose a real estate career, women prefer residential real estate sales to commercial. A general preference for salaried jobs to those with income uncertainty. Or that people are working longer because they’re living longer.
But there are few prospective agents of any gender, race or age walking in the door these days. And succession plans? Not every brokerage has a family dynasty to fall back on, so there’s a lot of angst about the future.
CRE isn’t the only industry who can’t seem to find much less keep good people. But commercial real estate is not an easy career to sell. Typically an independent contractor, you’re in charge of creating your success. Since compensation is almost always commission only, you don’t get paid until you do a deal. It can take a year or two before the money starts rolling in.
It’s one of the reasons for all the attention on Millennials. How can CRE attract and keep them? How do you accommodate their desire for inclusion, work/life balance not to mention get them some quick cash so they can pay off those student loans and have enough left over to live?
And what about Generation X – the latch-key kids who, after being burned by the housing and dot-com bubbles of the last few decades are stuck in mid-level jobs with stagnant wages? Think they can be lured away from their steady paycheck to a career without one? You can’t even offer them quick advancement because the average baby boomer agent isn’t looking to retire any time soon. The latest recession took dreams of an early retirement off the table for many of them.
With demand for commercial real estate agents outpacing government projections of 11% by more than double (27%), if a brokerage did discriminate in the past, they can’t afford to any more. But in a rush to sign up anyone who walks in the door, poor candidates are being hired. For a lot of brokerages, agents come and go at a demoralizing pace.
So what’s a brokerage supposed to do? There’s the always popular, “kill all the industry inhibiting baby boomers” option. But you can’t do that without replacements – good ones.
Let’s just get rid of the middleman with technology. I have no doubt this will happen as even the most difficult transaction can be broken down and “algorithm-ized.” You can already see that for many tasks, people prefer interacting digitally instead of face to face. Even an open house or walk-through could be automated with an interactive dulcet type device, app or robot that provides building access and answers questions.
Lawyers, accountants, MBAs and programmers will be doing the work behind the scenes. There will be a role for sales – but not for selling real estate. Instead, you’ll be selling your company’s real estate technology.
But it will be years – decades – before this happens. So on to more realistic options.
Organizations like CREW not only support women currently in CRE but promote and educate women about the opportunities for them in the industry. There’s also programs like REAP that champions minority talent in partnership with the industry to support diversity. Other CRE professional organizations have specialty groups as well but they can and should do more to actively encourage, support and promote commercial real estate careers.
More colleges are offering MBA concentrations or seminars on CRE often partnering with local brokerages for guidance and assistance. But don’t wait for a university to contact you. If there are nearby colleges, give them a call and offer agents as guest speakers or supply internships. It’s a good way to introduce a new generation to the world of commercial real estate and find salespeople while you’re at it.
Can a single agent more productive with better, more efficient technology? Or is offering better, more efficient technology the way to attract better agents? This is a question CRE brokerages are trying to answer. Ranging from work flow management, back office operations, marketing automation and data resources, there are finally technology options specific to CRE to consider so they can assess whether technology is the answer or not. Keep an eye on how the national brokerages’ CRM deployments pan out.
Often used for training and retention, providing mentors for new agents can also be a good recruiting tool. Many Millenials don’t mind – even like – being paired with baby boomers since they’re like their parents (assuming they got along with their parents…). The mistake Millenials make, though, is thinking that their boomer mentor will accommodate them like their parent did.
On the mentor side, many boomers like the idea of giving back. But just as many are done with their “parenting” days.
Brokerages shouldn’t saddle a good mentor with a poorly screened new agent either. Learn how to hire better. There’s a certain fire in the belly that good salespeople have, so figure out how to “see” it.
Is it time to pay salespeople a salary? Some “thinkers” think so. And the government sure likes salaried employees a whole lot better than independent contractors. But for a job that demands performance, is there no better motivator than commission only compensation?
A few brokerages have taken a middle route offering a base pay with commission. These usually work best if the base pay is not so high as to inhibit motivation but not so low that you have to live out of your car. It also gives the brokerage some control over how the agents must do their work.
Offering salaries or not is a numbers game and, depending on the state, many brokerages can’t make it work. Or so they say. Maybe it’s time to look at the numbers again. Few people have the resources to live on nothing for a year. And those privileged white males are getting harder to find.
Original Post: March 15, 2015