I spent some time with the leadership team of a mid-sized real estate company in the Midwest last week.  They’ve been clients of Tidemark for more than two years and have noticed that the traditional candidate pools for real estate agents are not producing sufficiently productive new agents.  I sensed deep frustration over their realization that what has worked in the past, is not likely to produce results in the future.

One of the candidate demographics that seems to be most troubling is the baby boomer new agent, whose spouse has a traditional full-time job with benefits.  The spouse provides the financial safety net for the family, and the agent’s job is to bring in extra income for needs such as college expenses, an extra car payment, money for vacations, etc.  If the real estate market is expanding consistently, this arrangement seems to work pretty well—both for the agent (standing in the right place at the right time) and the real estate company (it needs individuals to take orders and provide basic customer service).

But, as the economics of the real estate industry have worsened, this traditional arrangement has become very strained.  A new agent can no longer make an impact (or any money) without true skills and focus being applied to the real estate sales profession.  A real estate company cannot meet their financial goals by depending on this type of lack-luster talent.

Is all lost?  I don’t think so.  But the agent/company relationship will change based on the nature of employment, the economic realities of the housing market, and the continued pressure that emerging technologies will put on traditional real estate business.  Companies that can adapt to these changes will be able to capture the available opportunities in the future.

One of the trends that the real estate industry can benefit from is what many people are calling “the death of the traditional job with benefits.”  In years past, a real estate company was often at a disadvantage, competing for talent against companies who could offer someone a steady paycheck with benefits.  Even commission-based sales positions in other industries (ex. insurance, technology sales, media sales, etc.) commonly offered base pay and benefits in addition to commission.  But, according to a recent CNN report, all that may be changing…

“Jobs may be coming back, but they aren’t the same ones workers were used to.

Many of the jobs employers are adding are temporary or contract positions, rather than traditional full-time jobs with benefits. With unemployment remaining near 10%, employers have their pick of workers willing to accept less secure positions.
 
In 2005, the government estimated that 31% of U.S. workers were already so-called contingent workers.  Experts say that number could increase to 40% or more in the next 10 years.

James Stoeckmann, senior practice leader at WorldatWork, a professional association of human resource executives, believes that full-time employees could become the minority of the nation’s workforce within 20 to 30 years, leaving employees without traditional benefits such as health coverage, paid vacations and retirement plans, that most workers take for granted today.

‘The traditional job is not doomed. But it will increasingly have competition from other models, the most prominent is the independent contractor model,’ he said.”

So, let’s put two and two together… We have real estate companies who are no longer able to depend upon B-level talent to get the production they need.  In addition, we have A-level talent in the employment market at large, who are increasingly willing to look at an independent contractor employment model because the traditional “job with benefits” is becoming scarce.

This is a trend that can be capitalized upon.  Next week, we’ll talk about some ideas about how to make this happen.