The National Association of Realtors says the median age of its members has inched up to 57, its highest level in 15 years. Agents 40 and younger were just 11 percent of its membership in 2013, down from 20 percent in 2003.
With this in mind, Warren Buffett’s real estate franchise unit, Berkshire Hathaway HomeServices, recently formed a task force called the REthink Council to explore the topic. Ten agents who are 35 and younger from its offices around the country will gather this month to brainstorm and come up with ways to make the profession more attractive to a younger demographic.
One member of the task force briefly explains what he thinks is happening:
At the time, though, it seemed pretty obvious to me why there weren’t more people my age who were doing this: It takes a lot to get started in real estate (before income starts to flow). There’s a lot of fear and apprehension — what if I don’t make it, what if it takes a while to make money, how am I going to pay my bills?
It was obvious to me then and it’s obvious to me now that there’s a major lack of businesspeople jumping in to real estate. We’re going to have one generation getting out and the next generation is not filling the hole that’s going to be there.
All of this could be very interesting given the projected trends that younger Americans still generally want their own spaces as adults but are more frequently living alone and often want to live in denser areas that offer more cultural and entertainment amenities. If a majority of real estate agents are older, can they still connect with younger buyers who want different things?
Also, this younger agent makes a real estate job sound quite entrepreneurial: you have to take risks, trust your selling abilities, and work hard to drum up business. I’m just speculating but I wonder if this is indicative of declining interest in individual entrepreneurialism. It is one thing to want to go into business with a firm but another to strike out more on one’s own as an agent.
Finally, what are the figures for how much a new real estate agent could expect to make within 1, 5, 10 years? With the glut of articles these days about the income different jobs can expect, how many new real estate agents succeed? Here is some recent info:
Only 2% of Realtors, a trademarked term used by the National Association of Realtors to which the majority of real-estate agents belong, earn more than $250,000 a year. The median annual income nationwide was $43,500 in 2012, up from $34,900 in 2011. The average commission rate for 2013 is projected to be 5.2% of total sale price, according to Real Trends, a Castle Pines, Colo.-based research firm…
Most hopeful agents need to save up before they begin. Studying for the broker’s license exam, which covers both national and state laws and regulation, can take weeks, says Bopa Touch, administrator at the Rockwell Institute, a real-estate training school in Bellevue, Wash. In 2013, the company almost doubled the number of students taking its three-week, $489 broker’s license course, compared with 2012, says Ms. Touch. Between registration fees and desk fees—an amount paid to the brokerage firm to cover operating expenses—most new agents spend $2,000 or more to get started, which doesn’t include months of living expenses necessary before commission checks start coming in. “They don’t realize how much money they need to start,” Ms. Touch says.
The median is not very lucrative…