The Aging Real Estate Agent and "Knowledge Walkout"

According to the National Association of Realtors (NAR) the "typical" Realtor in the the United States is 54 years old and the "typical" broker is 56 years old.  How "typical" is determined by NAR is unclear but it appears that they are looking at median age versus mean age.  For the purposes of this discussion we are going to assume mean and median are the same.  That is an incredible statistic and here is why...

• The average age of the American worker is 34.6 years old.  While that number is expected to rise to 40.6 in the next several years, there is a huge disparity between the average American worker and the average Realtor.

So the question is, So What?  Well here is the issue.  Something called "Knowledge Walkout".  Those agents that are 54 years old are going to retire and as a group they are going to retire sooner than later.  In addition, those agents have a huge amount of knowledge in the field of real estate.  While many things have changed in the field of real estate over the last 10 years, the fundamentals remain the same.  Yes, internet marketing has made a difference, but the fundamentals of customer service, referrals, knowledge of a local area, and contracts are essentially unchanged.  

Click HERE for a example of how defense giant Northrop Grumman tried to deal with this issue.

The real estate industry is well behind the power curve of knowledge walkout, but better late than never.  How is it that real estate companies can establish systems and procedures to capture the knowledge of it's agents before they retire.  The answer of capturing knowledge is largely NOT a result of some great technology.  Instead it is most effective done through tactics such as Communities of Practice (COP) and story telling.  Many people will laugh at the idea of something like story telling.  Steve Denning, is a leader in this field.  Before discrediting some of these "non-technical" aspects of KM I would encourage you to investigate some of his works. 

The First Fax Machine in Loudoun County and Consensus Vs. Vision

Years ago when our office was young, and we only had a hand full of agents, decisions were made differently.  At our office we looked for consensus before decisions were made, especially when it came to things such as investing in new technology.  Back in 1987 that new technology included things like fax machines.  It's interesting how things have changed, because today fax machines appear to be on their last leg as technology advances.  More and more people are becoming comfortable with scanning and less and less are using the traditional fax.

Back in 1987 the owners of the company decided that it would be a good idea to incorporate this new fax machine into the office.  The great fax campaign of 1987 started, it was dubbed, "the gang of two".  The owners started educating agents on what a fax machine was, and why it would be useful.  Some agents were receptive while other were not.  They needed 50% of the agents to agree in order to buy this new equipment. After the vote they were one short of the necessary votes to get a fax machine.  The owners ended up finally convincing the additional agent to vote for the fax.  Of course it took a lot of additional resources and time to convince the last ten percent. In hindsight there is no doubt that a fax machine was a good investment.

Since that time the policy in the office has changed.  Decisions are made based on the vision of the owners, not based off consensus of the agents.  That is not to say that agent input is not encouraged or required.  It is essential to get input from the agents.  The question is how are effective feedback loops established within an organization.  How does an organization balance vision and input. The concept of crowdsourcing comes to mind

The concept of crowdsourcing discusses outsourcing of traditional tasks.  Input from agents is critical, but equally as critical is the timing in which questions are asked.  Look for consensus for vision and you may unnecessarily slow down the organization!

Is Real Estate too Flat?

There are a number of unique challenges in the field of real estate.  One of the most interesting challenges revolves around the employment relationship between most real estate agents and their brokers.  Real estate agents are most often employed under an independent contractor agreement.  This usually translates into a situation in which it is difficult to implement overall corporate structures that are adhered to by all agents.

I do not pretend to be an expert about the intricacies of being a residential real estate broker.  I am not a broker and I do not have a particularly long history in real estate.  However,  I do have some observations as real estate relates to knowledge management and organizational design.  In many ways the employer/employee relationship within these companies appears to be flipped.  In a traditional company the employee will work for a salary and in return perform a specific task for the employer.  In residential real estate the agents pay a fee in order to enjoy the office/franchise facilities and resources.  The name of the game for brokers is to produce the most supportive environment possible in order to attract and retain as many high producing agents as possible.

Through this relationship the traditional employee/employer relationship is altered.  If the broker offers a new technology it is generally the decision of the individual agent whether they will use the technology or not... In some ways this could be looked at as the ultimate "Flattening" of the organization.  Flattening organizations is, of course, quite the buzz in the business world these days,  but how flat is too flat?  When an organization, or in this case an industry, is this flat does it limit the ability of organizations to develop unified corporate IT solutions, solidified core business processes, or best practices?  Some would argue that those best practices would "float to the top" naturally and then be accepted by all.  Experience shows that this is not always true in residential real estate.  In some cases, such as IT solutions, too many choices may not always be a positive thing.

Next post I will describe some of the challenges of our companies ongoing migration to Google Business Apps....and the story of the first real estate fax machine in Loudoun County, VA.