Changing Realtor Demographics:
Newbie’s, Old-Timers and . . Hybrids
Realtors seem to be getting younger. And older.
One of the most dramatic changes in the real estate business — now three-plus years into a downturn — has to do with realtor demographics.
Fewer deals, at lower prices, means dramatically reduced commissions for the nation’s one million-plus realtors. Not surprisingly, their ranks are thinning: from a peak of 1.2 million realtors nationally in 2006, that number is quickly headed below 1 million.
The realtors who are left increasingly seem to fall into one of three categories: Newbie’s, Old-timers, and Hybrid’s.
Newbie’s. The “Newbie’s” are typically fresh out of college — or have never been. Their network of friends and business contacts from which to mine deals — in realtor-speak, their “sphere of influence” — is green and undeveloped (just like them).
So they’re not selling much real estate. However, with low overhead, they don’t really have to. In the mean time, real estate offers flexible hours and often, a ready-made social life (all those other Newbie’s to hang out with!).
As you might expect, Newbie turnover is quite high.
Old-Timers. First, a qualification: in real estate, an old-timer is anyone who’s been at it more than 5 years (like dog years, one year in real estate equals 5 in most other businesses).
Like a desert plant that has deep enough roots to survive a drought, old-timers have an established network of past clients from which to generate transactions.
However, two phenomena associated with the current market are stressing even many old-timers.
One. In many parts of the country, half or more of all recent transactions are “lender-mediated,” involving either a foreclosure or short sale. While the public views these as a way to make a killing, to a realtor, unfortunately, such properties are often time and money sinks.
Two. Accelerating technological change.
Instant messaging. Blogging. Face Book. My Space. The Web. Mention any of these to many realtors over 50 and their eyes glaze over.
Real estate going forward is increasingly about technology — and older realtors know it. The ones not investing the energy to master all the new technology tools are becoming obsolete, regardless of whether they officially stay in the business or not.
Hybrid’s. As their name suggests, Hybrids combine an old-timer’s contacts, maturity, and deal-making experience with a newbie’s energy and technology prowess. The meek may inherit the world . . . . but the Hybrids are poised to take over the real estate business.
As a self-proclaimed Hybrid, I view the changes sweeping the real estate business with a combination of hopefulness and ambivalence.
Hopefulness, because I see real estate becoming the province of a relatively small core of highly-skilled professionals, who are valued (and paid!) accordingly. Like a good tennis match, it’s also more gratifying and fun — and yes, easier — doing a deal when the realtor on the other side knows their stuff, too.
The ambivalence has to do with seeing many people I know and like leaving the business (to paraphrase Bill Joel, “only the nice get out”). While reduced competition is good for my bottom line, real estate is a people business, and some of the people I like best are now gone!
These realtors also represent a huge store of institutional knowledge. Losing that experience and continuity makes the field a little less interesting and rich for both the realtors who remain, as well as for the public at-large.