There Is A Ticking Time Bomb In Real Estate, Are You Prepared?

The real estate industry is closing fast on an issue that at yet seems to have no real answer. 

The big talk in the industry is selling to the Millennial and/or recruiting the Millennial. Something that should be considered is, what are we going to do about filling the shoes of the Boomers as they retire?

 The average REALTOR today is a 56 year old female. That topic has been discussed for some time, however the average age of the Managing Brokers and Broker Owners is closer to that 65/67 retirement age. The same can be said of the leadership with most MLS's. Part of this is just a result of the birth numbers coming back to bite us. 

 The Baby Boomers were the largest population for decades. What they did drove the market for the last 50-60 years with their 78 million members. The Generation X that followed only had around 50 million, so by sheer numbers didn't make as big of market impact. Now we have the Generation Y or Millennials with their 78 million and off we go again. What we are now finding is that there are 10,000 Boomers turning 65 every single day. 

 The challenge becomes - what are broker companies doing to prepare for this shift? The real estate industry has always been highly fragmented with the vast majority of brokerages, associations, and MLS's being small organizations. We know that from NAR's 2014 Profile of Real Estate firms that 81% of brokerages have only one office and another 12 have two or three. That means that 93% of real estate brokerages are small companies. 

 With real estate, one of the biggest struggles is that companies are simply too small to have a leadership team in the first place. From the Council of Real Estate Brokerage Managers (CRB) membership data, we learn that 54% of the brokerage managers manage fewer than 50 agents and 41% fewer than 25.  This means that most brokerages are simply too small to have a deep pool of leadership talent. When we lose the paper-thin level of quality leadership we have at the top, we have a real issue. 

 When we look at the experience of the management we find that 59.6% have over 15 years of experience as Broker Managers. Since we have a high starting age, that means we have a very high average leadership age. Remember that most of these companies have only been led by the founder. When those individuals retire, what happens to those operations?

 There is no greater moment of risk to a company than when it has to change its leader.  Especially if the departing leader is a charismatic, driven entrepreneur, like the ones we tend to find in the real estate industry. How the organization deals and prepares for this change will then make or break them for years and years to come. 

 The loss of leadership and maybe just as important, the loss of relationships that were developed over those years, will need to be addressed. These leaders, who make thousands of decisions each and every day that affect the whole of the industry are getting older as a group. As they retire it will leave a huge leadership vacuum. Therefore one of the most urgent issues for C-level leaders and those responsible for organizational strategy is to set up a clear plan of succession and begin grooming the leaders of tomorrow, today. If not, many companies will face a longtime leader riding off into the sunset without leaving a sheriff behind. 

 This is one of the reasons we at RE/MAX Ability Plus believe that so many Broker/Owners of Independent firms, as well as with brands, are hiring us to take over that back end support of their companies. This allows them to go sell, thus taking the stress of managing their companies off their shoulders, as well as the worries of what to do next.