If the real estate industry were to lose 400K or 500K jobs over the next 3-5 years, would anyone really notice? Probably not, in large part because the “nuts and bolts” of the residential real estate marketplace are rarely discussed in public. The Association of Real Estate License Law estimates there are 2 million real estate licenses in the U.S. NAR, the National Association of Realtors, the industry’s leading trade group, boasts 1.2M members.
Huge numbers for sure, but how can anyone be so certain the industry is about to lose hundreds of thousands of jobs?
In 1978, at the height of the franchise movement, the average age of a real estate agent was 42. By 2000, the average age was 50. By 2012, the average age was 56. As of last year, 2016, the average age of a real estate agent had gone up to 58 years old. Name another industry in the United States that has a workforce of two million strong with a median age of; “nearing retirement”?
If the aging workforce wasn’t enough of an indicator of impending change, think of reliance on technology as the, “other dropping shoe”. Consider how we “use” Realtors? For example, in Inman Park, a suburb of Atlanta Georgia, the Community had 92 sales transactions in 2016. For those 92 transactions, 78 different Listing Agents were used. One doesn’t need an MBA to realize those numbers don’t speak to efficiency. Considering this type of sales strategy impacts an individual’s “nest egg”, the inefficiencies of this business model should be alarming to everyone.
Were the 2016 Inman Park home sellers best served by using 78 different Listing Agents? Probably not. Did the homeowners choose that direction or was that direction chosen for them for lack of any viable alternative? I am guessing it’s the later which is exactly the point. Technology and innovation have given us the tools needed to easily create any number of real estate alternatives.
Inman Park Realty, inmanparkrealty.com, was created to provide a sales channel alternative to the traditional chain-store format. From a technology standpoint, this Community-based, socially-focused, flat-fee business model couldn’t have been possible a few years ago. Not surprisingly, one of the stated objectives of Inman Park Realty is to reduce the number of listing agents in an effort to be more efficient and cost effective for the homeowners of Inman Park. The message is clear, technology is attacking the business efficiency of the aging franchise format.
A dying industry doesn’t seem like great news at first. But, when you consider the number of houses being bought and sold isn’t going to suddenly decline, the potential for opportunity becomes obvious. The retirement of so many agents, who began their careers at the dawning of the franchise movement, will allow today’s newer agents, like their predecessors, to usher in their own movement or sales methodologies better suited for the culture they serve. Just as innovations in printing technology gave rise to the franchise movement, Social Media has not only redefined messaging, it has functionally changed the way realtors conduct their trade.
The Inman Park Community is ideally suited for an alternative real estate sales model, and could act as a signpost for others. Inman Park is a well-defined area, a requirement for creating a new sales environment. Arguably, Inman Park is one of the most valuable real estate brands in Atlanta. But, real estate brands are simply what people identify with, and Atlanta has hundreds of established brands. The neighborhood Association, IPNA, is one of the oldest and most accomplished. Again, Atlanta has more than its share of active Associations.
But, the single biggest reason Inman Park Realty just might create change, is because they are speaking directly to those who have the most to lose.
Inman Park homes sell for a considerably higher price than the area average. This means homeowners pay a lot more in agent commissions. Adding insult to their injury, Inman Park homes sell 4X faster than anywhere else in the area, often to buyers who have been waiting for their listings to appear. Paying more while getting less is a difficult position for the traditionalists to justify. Inman Park Realty is trying to end the idea of sales commissions being based on a percentage of a home’s sale price by promoting a newer, socially-focused business model featuring the idea of a neighborhood flat-fee.
Will this work; the future is unknown. But, much like the first time you saw a NetFlix CD in your mailbox, you know change is coming. (I bet this means fewer Blockbusters!) The confluence of massive industry retirements with emerging technology means an entirely different real estate industry is beginning to emerge.
Regardless if Inman Park Realty proves to be smart real estate, its goal of giving homeowners, within a specific Community, a sales alternative is something that is happening throughout the Country. Across America, the changing of the old guard has meant many different ideas and approaches to real estate.
Good ideas are often like seeds. What’s happening in Inman Park can happen anywhere where homeowners refer to their neighborhood by its brand name. The stronger the brand, the more control homeowners will have. Realtors know all too well, not all brands are alike, so why do they continue selling as if they are?