Sunday, January 20, 2013

Multi-generational Issues in the Real Estate Industry

From my Strategies in Human Resource Management graduate course, below is this past week's assignment discussing multi-generational issues within real estate brokerages. Other industry issues discussed are education, fee-for-services and technology.

From a consumer’s point of view, the real estate industry is known to be dynamic in nature due to the presence of buying and selling of properties within the market. From a real estate broker’s perspective, today’s brokerages face a new type of managerial challenge involving salespersons from different generations. Sprague (2008) defines multi-generations as four groups: traditionalists, boomers, generation x and generation y. A major contributing factor to multi-generational realty brokerages is the low educational requirement for becoming a state licensed real estate salesperson. In the state of Florida, the requirement for becoming a licensed salesperson is attending a 63 hour pre-license course and passing both the end of course exam and then the state exam as well. Other minimal requirements for becoming licensed are acquiring a high school diploma or equivalent degree, being at least 18 years of age and disclosing any criminal record, name aliases or denial of prior disclosures (Crawford, 2007). Since a large percentage of the general public qualify under these minimal standards, one can realize the constant challenge of managing the continuous influx of newly, licensed salespersons comprised of the four multi-generational types especially during housing boom periods similar to the early 2000's.

As a former licensed salesperson, broker and instructor, I witnessed first hand the many issues of multi-generations within a real estate brokerage. First, salespersons working for a broker are considered non-salaried, independent contractors. Crawford (2007) describes a salesperson as a licensed individual performing real estate services for compensation under the management of another person or specifically speaking, a broker. This employment arrangement creates an atmosphere of intense competition between all of the broker’s salespersons for obtaining new property listings which will hopefully lead them to closings and then an eventual commission check. Because of this “list or die” scenario, experienced, highly networked salespersons, usually the traditionalists and boomer agents, will attempt to out market the younger and less funded agents by blanketing signage across designated sales territories and executing constant advertising in magazines, billboards and on the web. This type of strategy tends to strain the working environment within a brokerage along with defeating any possibility of a team effort.

Maximizing potential revenues, a broker may spend more time and effort with high producing or “top producer” salespersons because he or she will likely earn more revenue from the increased likelihood of more closing commissions. This normally means more face time with traditionalists and boomer agents than generation x and generation y. To add to the difficulty of being a new agent, the only form of compensation received is by receiving a commission split from payment by the seller or buyer to the broker (Crawford, 2007). In reality, a new agent may not receive compensation for months or even more than a year when first starting out in real estate. This causes many new agents to leave the industry after two years because of insufficient funds for living expenses and business costs such as office fees, membership fees, and marketing expenses.

Second, the top producers of a brokerage may receive a more favorable commission split with the broker because the broker is more confident these agents will "Always Be Closing" which is known as the ABC's of real estate. Generation x and y are at a disadvantage again since their broker is taking a higher percentage of the commission split. Third, if the the brokerage is a well known franchise such as Remax or Century 21, a training department with trainers may exist to help train new agents. However, for many smaller and independent brokerages, the broker must individually train each new agent which may encompass a day or two of in-the-field property driving and in-house reviewing of the multiple listing service and many contract forms. In addition, a broker must also deal with the many political issues of which agent will work the sales floor during business hours along with distributing incoming calls from potential sellers and buyers (Crawford, 2007). Again from a broker's point view, these first points of contact should ideally go to the more experienced agents, traditionalists and boomers, within the brokerage because they have the necessary experience to better close these potential deals compared to the generation x and y agents.

Before the introduction of the Internet and World Wide Web, traditionalists and boomer agents marketed using physical books and newspapers to advertise themselves and their listings to potential buyers and sellers. Nowadays, the younger generations who have grown up with the latest technologies market themselves and their properties effortlessly on social networks and personal websites. Brokers realize this new division of technical skills between the older and younger generations and are challenged once again with managing multi-generations within brokerages. Since the average age of a salesperson is 56, most traditionalist and boomer agents are at a technical disadvantage because they are generally deficient in the areas of computer programming and web design (Inman News, 2011). Whereas, generation x and y may have gained prior technical skills from another industry, an internship or in a recent academic course. Real estate brokers must once again weigh the pros and cons of recruiting younger more technical agents while intermixing them with older less technical agents within their brokerages.

Unfortunately, the real estate industry, brokerages and brokers have not successfully reacted to the above trends. Licensure requirements remain minimal which continues to create a very low entrance barrier into the industry. Furthermore, many laid off workers from other industries, retiring workers and individuals with dreams of big commissions will continue to flow into the real estate industry just to exit as soon as a housing bust occurs or when personal savings evaporate. Technology is constantly changing which causes agents and brokers to chase the next "bright shiny object", without considering how these trendy technologies integrate into their daily business operations which eventually become time management distractions. But, in my opinion, the main reason why managerial issues continue to exist between multi-generations in real estate is because of the commission model which creates a one-size-fits-all model for talent management as mentioned by Sprague (2008).

In my opinion, solutions for managing multi-generational brokerages begin with the elimination of the commission model. A replacement model for introducing an hourly rate and providing an a-la-carte menu of services is known as the fee-for-services model as recommended by Garton-Good (2001). Once fee-for-services is in place, salespersons become consultants paid by the hour rather than commission only junkies.This scenario leads to a possible base salary in addition to an hourly consulting fee for new salespersons which would provide a monetary cushion in the event billable consulting hours decline in the current period or in future periods. More importantly, the fee-for-services creates an increased cooperative workplace and possible level-playing field for managing and treating all salespersons in the same professional way (Wong, Gardiner, Lang, & Coulon, 2008).

Another immediate benefit of the fee-for-services model for brokers is the retention of current staff. Because of the removal of "list or die" originating from the commission model, agents are able to grow their career and develop their sales and consulting skills instead of dropping out of the industry in two years or less. Also, staff training across generations becomes more consistency and higher valued for the broker due to less defections to other industries and decreased terminations. Competition still exists between the multi-generations because of varying consulting rates, however, team building can be produced among generations along with challenging younger sales agents as mentioned by Wong et al. (2008). By implementing the fee-for-services, a broker has a new opportunity to synthesize the organization's brand, products and multigenerational staff for optimizing its business operations while providing a viable service to the private sector.


Crawford, Linda. (2007). Florida Real Estate Principles, Practices & Law. Chicago, Illinois:Gaines & Coleman.

Garton-Good, Julie. (2001). Real Estate a la Carte: Selecting the Services You Need, Paying What They’re Worth. Chicago, Illinois: Zigmund.

Inman News. (2011). Today’s Realtor: older and more experienced. Inman News. Retrieved from

Sprague, C. (2008). The Silent Generation Meets Generation Y: How to Manage a Four Generation Workforce with Panache. Human Capital Institute, 1-15.

Wong, M., Gardiner, E., Lang, W., & Coulon, L. (2008). Generational differences in personality and motivation: Do they exist and what are the implications for the workplace? Journal of Managerial Psychology, 23(8), 878-89.


  1. It's absolutely true broker's invest more time, energy and listening to the agents generating business... but they do invest money in new agents... further there is plenty of real estate business in every city for every agent in any office, agents should be competing against agents in other offices - not within their own office. But, yes overall it is the typical 80/20 rule - 20% of the people do 80% of the production/work!!
    PS. Paragraph 4 repeats...

  2. Paragraph 4 removed, thanks for the catch.