Today, we’ll finish up a discussion that was started last week on the role of the millennial generation (those currently ages 18 – 35) in the real estate industry. 

The original topic was sparked by new research showing that millennials are delaying getting into the real estate market (as first time buyers) compared to previous generations. 

The question I posed last week was:

Do you believe it takes a while for a person to mature to the place where they are ready to perform the tasks of a real estate agent?

Or, do you believe the agent job can be equally performed by any age group?

Thank you to those who took the time to share your thoughts.

Across the board, not too many people came to the defense of the millennial generation.  In general, most of you seem to believe that individuals in this age group may need to mature before taking on the tasks and responsibilities of a real estate professional.

Thomas Maier, a broker/manager for Berkshire Hathaway Home Services Carolinas Realty, disagrees:

I believe that any age can make a fantastic Realtor.  I feel the primary ingredient must be that they desire to make this a career and know they must invest long hard hours early on to see the sustainable return on their investment. 

In the same way some of the millennial generation lack patience due to the “now” attitude of our technological society the older “new” agents sometimes lack patience for a different reason.  They often see this as a quick or last ditch fix to try to create income for retirement and do not feel they have the time to build for the future. 

In our area many of the top 20 agents industry wide are under 40.  They are the ones who start young, have vision, put in the work, and built a solid foundation early on.  They see this as a career and that they own a business, not a stepping stone or hobby along the way.

As a side note, Thomas is part of the millennial generation.  He started working in real estate soon after college, focused his efforts on building a successful business, and lived what he described.  There is no doubt that some millennials have been very successful in real estate.

But, are there enough individuals like Thomas (and his high performing peers) to fix the demographic problem (large number of existing agents are 55 or older) outlined in last week’s WorkPuzzle?

Scott Nelson, owner and CEO of Comey and Shepherd Realtors in Cincinnati, thinks that focusing recruiting efforts on millennials is a mistake.  Here are his thoughts:

[Hiring millennials] makes sense on paper, but we sure haven’t seen it [work out consistently].  In fact, we had four or five under thirty quick in/quick out hiring failures in our Mariemont office last year, to the great discouragement of our manager there. 

[Our recruiting team] has talked about a quality we call “being settled” that an under thirty needs to possess before they really transition to the real estate industry as something more than an alternative to waiting tables. 

Being settled could mean being married or partnered up “permanently”.  It could also mean that spouses or partners have a solid, real job.  While those are not the only characteristics, they do have to be serious and focused on their careers.

Absent being settled, these young folk seem to be drifting and real estate is deadly for them. They don’t have the discipline it takes.

I think the [millennials home-buyer marketing sketch] supports the view that entry age for new agents is rising, not falling.  The delaying of everything by pampered millennials means, to me, that those under 35 are rarely appropriate for our business. 

In the millennial generation, everyone’s a winner and everyone gets a trophy just for showing up!  This translates into tolerance for later bloomers, semesters in Europe, moving back in with the parents after college. 

That’s the world we live in and I think it means we will largely continue to replace our retiring agents with the” settled” 40-55 year-olds.  These fresh 40 – 55 year olds tend to give us 10-15 productive years.  That’s just what we need.

Of course, there are exceptions to this rule—we’ll welcome anyone who can focus their talents on real estate and create a successful business.  But, the exceptions are rare.

Scott owns one of the highest performing companies in the country (on a per agent productivity basis), so he admits his company is very selective in hiring new agents compared to most companies.   He is very passionate (and made a life-long study) about finding the best fit for those who become agents in his company.

Not sure I can add much to what has already been said by Scott and Thomas—two different perspectives that were both well articulated.  You’ll have to make up your own mind on what works for your company.

This I do know, the discussion will continue and the puzzle of hiring the best people may never be fully solved.

Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. 

Earlier this week, I started a discussion on the disappointing impact the millennial generation is having on the real estate industry.  There has been lots of great feedback on this topic—thank you to all of those who have shared thoughts.

Today, we’re going to address the impact this generation is having on real estate recruiting.  More specifically:

Is there a connection between the millennial generation’s sluggishness to become first-time buyers and the way they approach their careers?

Before answering this question, let’s lay a little ground work.  For the last couple of years, I have been using the following slide in my presentations:

Source: Real Trends, Inc. 

The y-axis represents the age ranges of real estate agents, and the x-axis represents total number of realtors in the United States.   It’s obvious that the real estate industry is “top-heavy” with older agents, and the problem worsened during the downturn.   

There is a serious demographic problem that needs to be corrected.  Also, this correction needs to happen over the next 10-years as the older agents start to retire and lose energy towards the business.

So, this demographic problem needs to be fixed.  How do you fix it? 

Many assume (myself included) that the real estate industry needs to hire as many young professionals as possible.  The millennial generation (those currently 18 to 35) is a natural target for this fix.  

They are many in number, possess above average technology skills, and high percentages of them are underemployed.  They have limited career opportunities in the traditional employment market.

Is this not a match made in heaven?  It seems two cosmic problems (real estate needs new blood and millennials need meaningful careers) are coming together to form a perfect win –win solution.  Right?

Not so fast.  At least that’s what some of you have been telling me.

There may be a problem with the capacity that many in the millennial generation have towards building viable careers.  They not only can’t buy houses, but they also may have trouble focusing enough to develop a self-guided career.

Part of this conclusion is based on the real estate marketing sketch we did earlier this week (15.5% unemployment rate, 29% of those under 35 still living with their parents, $20K + in credit card debt, etc.). If they have financial problems keeping them from entering the real estate market, would some of the same problems also keep them from performing well in the role of a real estate agent?   It’s certainly a possibility.

As one of our readers commented,  “It used to be that kids worked for their parents.  Now parents work for their kids.” 

What are your thoughts on this topic?   Have you noticed a pattern with the millennials you've hired? 

Do you believe it takes a while for a person to mature to the place where they are ready to perform the tasks of a real estate agent? 

Or, do you believe the agent job can be equally performed by any age group?

Comment via email and I’ll share some of your thoughts (with your permission) in the next WorkPuzzle.

Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. 

Not sure if you noticed, but the highly anticipated millennial generation is not exactly pulling their weight in the housing market. 

This group of 74-million consumers (now ages 18 to 35 years old) is the primary focus of much marketing attention because of its size and supposed affluence.   For many market sectors (ex. consumer electronics), there is much to be gained by catching the attention of this group.   But for the housing market, this generation has become a disappointment.

New market research recently reported in the Wall Street Journal documents the depressing millennial generation realities:

For now, the absence of young adults from the housing market continues to put a dent in the homeownership rate, which dropped to 64.8% in the first quarter, compared with 65.2% in the fourth quarter of 2013, according to U.S. Census statistics. The rate was as high as 69.2% in the fourth quarter of 2004.

For those younger than 35, the rate has fallen noticeably faster. It slipped to 36.2% in the first quarter, from 36.8% in the fourth. The homeownership rate for this group was as high as 43.6% in the second quarter of 2004.

Of course, this begs the question: Why is this happening? 

I’ll address this question in today’s WorkPuzzle.  

Secondly:   How will this impact real estate recruiting? 

I’ll cover this topic in our discussion later this week.

Market Watch reporter, Amy Hoak, recently did a great job of boiling down the factors that are keeping millennials from entering the housing market.  Here is a quick summary:

Unemployment and low savings

The unemployment rate for 18-to-29-year-olds was 9.1% in April, which rises to 15.5% if you include those who have given up looking for work… The unemployment rate was 6.3% in April for all ages.

Forget that without a job it’s just about impossible to get a mortgage. (It’s also hard to rent: 29% percent of adults younger than 35 live with their parents, according to Gallup poll results released earlier this year.) A slow start to earnings also means a slow start to saving.  The majority of younger renters report having insufficient assets to cover a 5% down payment plus closing costs on a typical starter home.

Consumer Debt plus Student Debt

Young adults tend to have a high utilization rate on their credit cards, an average debt of $23,332 and high incidences of late payments. [In turn], Millennials also have the lowest credit scores [compared to other generations].

While a mediocre credit score might not have mattered all that much 10 years ago, it takes higher scores to obtain a mortgage today. And improving a score takes time.

In 2012, 1.3 million students who graduated from four-year colleges (or 71%) had student loan debt…. Graduating seniors with student loans had average debt levels of $29,400 in 2012, up 25% from $23,450 in 2008.

And new mortgage regulations, set into motion by the Dodd-Frank Act, require that borrowers have no more than a 43% debt-to-income ratio (with debt encompassing monthly housing costs and debt payments, including those on student loans).

Delaying marriage, family

The median age of first marriage is about 27 for women and 29 for men, according to the U.S. Census Bureau. In 1950, it was about 21 for women and 24 for men.

Because people are marrying and having kids at an older age, many young people might spend more years renting apartments and living in cities, before moving to the suburbs.

Meanwhile, the average age of first-time mothers was 25.8 years old in 2012…. The average age was 21.4 in 1970.  [During the same period], first-birth rates…rose for women between the ages of 30 and 39, the data shows.

Bottom line:  People with no money, no savings, lots of debt, and little motivation to change don’t make good real estate customers.  Hopefully this set of circumstances will change over time (if nothing else, these young people will eventually grow up), but it may take awhile.

Also, this may be a pattern that will continue to be followed by future generations in a “post traditional values” America.  How you adjust to this reality is a problem every real estate company must solve.

Next time, we’ll discuss how this reality is impacting real estate recruiting.  You may be surprised at some the changes that will be NOT be coming…

Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. 

I’m not sure how I ran across this blog (it is much more technical than I usually read), but I found Cyrus Stoller’s guidance on modern day communication helpful.  Cyrus is an entrepreneur and technology consultant, and it would be a great way to start a discussion on how your team communicates with each other.

With more options available for electronic communication, it only makes sense to choose the correct medium for your messages if you’re going to successfully connect with those in your audience.  

However, there do not seem to be any well-understood social rules for these interactions.  It’s like going to a wedding in the Northwest (which I did last weekend)—some people are wearing expensive suits and others show up in jeans (I’m not kidding).    

Is there any generally accepted convention on what’s appropriate in the world of electronic communication?  I don’t believe so.  But, Stoller’s open message to those he communicates with would be a great way to have this discussion with your team.

We're in an unfortunate equilibrium where it's not uncommon for people to expect under one-hour response times to emails. In my view, emails should not be used to communicate information that requires immediate action.

Most people I interact with have smartphones; we should agree to use different channels of communication to convey purpose. We're no longer restricted to just phone calls and email.

If I had my way this is how I would have people communicate their requests.

Disclaimer: Realistically this will only work with people you communicate with often e.g. employees/co-workers, family, and close friends.

If you need something to be done in:

30 minutes: call

two hours: text

today: IM

a day or later: email

Priority 0 – Voice Call

If you need something to have been done five minutes ago, call my cell phone. This gives you an opportunity to make sure I understand exactly what you need done and you know exactly when I received your request….

Litmus test: If we were in the same room and I was talking to someone else would you feel comfortable breaking up my conversation and taking me aside? If not, then a voice call is not the appropriate choice.

Priority 1 – Text Message

If you need something done in the next couple hours, send me a text that says something like call me asap or call me when you hit a break point.

This gives me time to gracefully wind down what I'm doing and call you back. I think most things that people find urgent fall in this category. It needs to be done soon, but it can wait up to 30 minutes to an hour….

Litmus test: If we were in the same room and I was talking to someone else would you feel comfortable signaling to me to wind down my conversation? If not, then an SMS is not the appropriate choice.

Priority 1a – Instant Messaging

Instant message works well for slightly more asynchronous communication. You're interested in getting a short response promptly, but it doesn't need to be right away. This is less disruptive than calling or texting. This works well when you need to find out a concrete piece of information before you can proceed.

Litmus test: If we were in the same room and I was in the middle of reading something would you feel comfortable leaving me a hand written note? If not, then an instant message is not the appropriate choice.

Priority 2 – Email

Email should be reserved for requests that you want addressed within the next day or so. Ideally it would be acceptable for people to only check their email a few times per day….

Most people I know feel like they have too many emails to deal with. Think twice about whether email is the right way to communicate your information. You should expect email threads to be truly asynchronous. I want people to move away from expecting near real time responses.

Litmus test: Is this request something that you would feel comfortable dropping in an inbox on my desk when I wasn't there? If not, then an email is not the appropriate choice.

What are your thoughts on this topic?   Do you have a convention for communicating with those on your team?

If not, it might be worth discussing as a way of not only streamlining your communication with others, but also managing expectations.  Let me know how you’re handling this issue in your organization and I’ll publish a few of the responses (reply via email and don’t expect a response for a couple of days :).

Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.