Recently, I was going through the audio from the HearItDirect SoCal event, where one of the more exciting panels featured Gen Y buyers. It was an eye-opening experience. There was one exchange I felt was so important that it deserved to be singled out.
Ladies and gentlemen, meet the consumer of the future!
You may decide for yourself whether to take this Gen Y buyer seriously or not.
Many responses to what this Gen Y buyer has to say will probably fall under the category of "preaching to the choir." Real estate agents will tell other real estate agents why the consumer is a fool for not using a real estate agent.
But there’s so much deeper meaning in what this young woman has to say in this short segment that we should take a closer look.
When she says, "I really feel like we did the majority of it on our own now, so … why not do it on our own," it’s not news to anyone in the business that the Internet has changed consumer behavior. Studies by the National Association of Realtors and others show the vast majority of consumers use the Internet during their home search process.
In my last column, I wrote about a new startup called BuyerCurious, which is attempting to provide a self-service solution not only for listing search, but the offer-and-negotiation process. Responses to that column have included numerous observations that agents remain valuable. While I don’t doubt most of those assertions, they quite miss the point.
The point should be that an entire generation of consumers has become extremely comfortable with self-service for a very large part of the home purchase experience. They expect it now. The Gen Y panel was filled with buyers who prefer to look on their own, and who don’t find emailed listings all that useful.
This is why all the hoopla around syndication is just hoopla. It doesn’t much matter whether the self-service channel is one owned by a public technology company or one owned by a brokerage, franchise or multiple listing service. Consumers are still doing self-service, seeing it as a more positive experience, and expecting it.
If consumers see themselves as willing and able to do the majority of the legwork on their own, the only rational response is to ask how else an agent might prove his or her value. A good agent is still incredibly valuable — but not in providing services the consumer wants and expects to do himself.
This challenge of providing and proving value will be with us for quite some time. It may be the signature challenge of brokerage in the information age.
No second chances
The more shocking fact, however, is that this Gen Y buyer was so clear about not using a real estate agent again due to one bad experience — despite having had two great experiences prior to that.
In fact, one of her agents was so fantastic that she and her husband offered to pay to fly him in to California to help them buy a house. And she acknowledges that even in Southern California, there may be great agents she would enjoy working with. As she said, "There must be one?"
Despite all that, one bad experience with one bad agent means that this well-to-do, high-income, young consumer may never use a real estate agent again. If we take her at her word, at any rate. Talk about painting with a broad brush!
It’s unfair, of course. It’s unwise. It’s idiotic in some respects. But that’s the reality. More importantly, I think that’s the reality with more and more of the future consumer: the highly educated, high-income, Gen Y buyer.
Given the economic headwinds that Gen Y as a whole are facing, I expect that the only people who are going to be in the housing market are going to be that upper echelon of New Elites.
They don’t trust companies or brands. They don’t trust marketing, because they grew up in an age where commercials, sponsorships, messages and advertising are literally everywhere. On the HearItDirect panel, the buyers were unanimous that they don’t even trust Yelp or Amazon customer reviews, because of a perception that "they can be purchased."
And because they are so highly educated and so smart, they are incredibly demanding of themselves and others. The young lady in this clip? She’s a doctor, and her husband is one too. At other points in the panel discussion, she admits that she’s a brat, that she wants what she wants and she wants it NOW. She knows it, but she doesn’t care. If you want her money, you will meet her demands, or she will move on — even if moving on means going it alone.
One screw-up with one bad apple is all it takes. You don’t get second chances with this generation.
Buiding trust with Gen Y
At the highest level, the attitude shift being brought about by changing demographics should be a major topic of discussion at every single Realtor association in the country. Simply saying that "Realtors follow a code of ethics" is not enough. One bad agent can turn a customer off to all agents for good, and arguing how unfair and stupid that is won’t get you too far with consumers, because they don’t care.
If you want the New Elites of Gen Y to trust the Realtor brand at all, I would think really long and hard about publicly punishing and expelling violators of NAR’s code of ethics.
If these Gen Y consumers can go to a Realtor association website and see that every month, agents are kicked out or disciplined for bad behavior, maybe that might serve as a starting point for building trust with members of this demanding and distrusting group. Otherwise, I don’t see the point.
But even at the brokerage level, this one-strike-and-you’re-out rule requires some thinking. Not every poor customer service experience is a code-of-ethics violation. Sometimes it’s just poor customer service.
If customers would complain, brokerages could at least address the issue. Instead, consumers just write off all Realtors. When they start telling their friends about their bad experiences — Gen Y trusts their peers most of all — then you’ve got a real problem.
Addressing this management challenge will require both strategic thinking and leadership courage. After all, the default mode in our industry is to boast about how many agents one has recruited to one’s office or company — not how many agents one has fired for not meeting expectations of customer service.
In a meeting I will never forget, a couple of years ago one broker told me that he doesn’t want to know how his agents are doing with customers. If he knew, the broker said, he might have to do something about it, and then he might lose the agent.
That mindset might have worked until now, and it may work for a while longer, as long as there aren’t any real good alternatives to working with an agent.
But that particular strategy strikes me as questionable when consumers have made it clear that they prefer self-service in huge chunks of the transaction experience, and that one bad experience means they’re done with you.
You are free to draw different conclusions from the clip above. Maybe this buyer is just being a crank, hardly representative of the Gen Y consumer. The sample size might not be big enough. Maybe you just don’t care, because you do it right and your clients love you. If so, great! Keep up the good work!
But if you do care, and you want to know where the puck might be headed, then listen without prejudice.