A new business model to attract young talent into real estate

Broker as investor: Tearing down the old business model

Tear down the wall image via Shutterstock.Tear down the wall image via Shutterstock.

Editor’s note: This is the first of a four-part series on a new model for real estate brokerages, in which brokers would invest in their agents. Renwick Congdon will explore his vision at Real Estate Connect San Francisco, during a Thursday, July 11 panel discussion,”Broker as Investor: Tearing Down the Old Broker/Agent Relationship.” Also participating in the panel will be Kevin Lisota, CEO, findwell; Debbie Lewandowski, director, First Team Estates; and Brian Boero, Partner, 1000watt (@1000wattbrian).

Nobody wants to be a real estate agent. Of course that’s an exaggeration, but not much of one.

You can see it in the demographics: Look at the latest National Association of Realtors member survey, which shows that a mere 6 percent of Realtors are under 34. At the other end of the age scale, the weight shifts dramatically — fully one-quarter of NAR members are 65 or older.

And you can see it in terms of perceived prestige (or lack thereof): US News & World Report’s ranking of the “100 Best Jobs for 2013” put real estate agent at number 74, right below plumber (73) and just above glazier (75).

Though real estate agents handily beat out bus drivers (80), they trailed hairdressers (56), home health aides (48), and those perennially popular professions: landscapers and groundskeepers (29).

Surely you won’t find those numbers surprising. The question I hear again and again from brokers around the country is, “How do we recruit younger agents?”

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Brokers say the younger generations aren’t interested in sales careers. The answer to the conundrum seems obvious: Stop recruiting salespeople, and start recruiting business owners.

Real estate is still recruiting salespeople instead of business people who covet a sense of ownership -- entrepreneurs.

Seriously. What we expect of agents is unreasonable.

We tell them, “You need to be farming and cold-calling and nurturing relationships and constantly looking at all the inventory that’s out there and be available 24/7 for the buyers and 24/7 for the sellers, and you should understand contract law and finance. And by the way, you need to be able to use all the latest technology as well as write interesting Facebook, Twitter and blog content.”

Which may be fine for some, but we’re living in an age — probably spawned by the flow of stupendous success stories from the tech world — when it seems like the real stuff of dreams is being a CEO, founding a startup, or owning your own business.

Why don’t people see those opportunities in the real estate industry? It’s because real estate is still recruiting salespeople instead of businesspeople who covet a sense of ownership — entrepreneurs.

During a CEO event co-hosted by Inman News and the New York Times in January, I shared an idea for a new — and potentially disruptive — model for brokers to attract younger and (perhaps more importantly) genuinely ambitious business professionals to the industry.

My proposal: Create structures within brokerages that support business creation and encourage those businesses to grow.

The LLC (limited liability company) structure is perhaps an ideal model. Agents no longer would be “agents” in the traditional sense. They — and their investors, including, potentially, their brokers — would own their own businesses.

If an agent-owner packed up and moved to the brokerage down the street, investors would continue to receive a return.

To be clear, we’re not talking about the existing concept of teams here. We’re talking about businesses within a brokerage, that would nurture the entrepreneurs who want to run their own show.

Most teams as they are constructed today are partnerships of equals. But in the proposed construct, they would be hierarchical, with the agent-owner at the top.

Admittedly, it’s not an uncomplicated premise, with the devil in the details. And, yes, it would be potentially disruptive to the industry. But that’s exactly what’s called for if we’re to bring in and retain the savviest minds.

Renwick Congdon is CEO of Seattle-area based Imprev Inc., a marketing technologies company he founded in 2000. A serial innovator and entrepreneur, Congdon serves on the board of directors of the Seattle chapter of Entrepreneurs Organization, a network of more than 8,000 business owners in 40 countries.

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