Part I of Why the Real Estate Industry Needs New Recruits focused on the influence the aging Realtor population has on misguidedly working to maintain the status quo in a rapidly changing business environment that is demanding a new business model. Part II will focus on the changing demographics of the general population and how new buyer profiles will affect the real estate industry. Part III will address the response of the industry to the eroding traditional agency business model.

Part II: Changing Buyer Demographics

One of the key differences between the baby boomers and the Gen X-ers is the ability to communicate, research and inform via technology. The under forty demographic is increasingly computer literate and uses the computer over 90 percent of the time to read news and search for information, including information on homes. Ready to serve this do-it-yourself market are more and more Internet sites which convey homebuying and selling information to educate this consumer. More on the outside of the loop will be the traditional "service-oriented" REALTOR^®.

The use of technology is already affecting Realtor incomes. A recent membership profile compiled by the National Association of Realtors revealed that the medium gross annual income of the "technologically advanced" Realtor is $57,000, while the median gross salary of the "low technology" Realtor is only $26,000.

With current research showing that the typical Internet user is 33 years old, college educated, and earning $60,000 or more per year in income, the similarity in profile to the qualified homebuyer is hard to ignore. These consumers are most likely to relate to a real estate professional who embraces the same technology and level of education.

Realtors will find they are increasingly in need of education to be able to communicate effectively with the more educated, financially able buyer. The buyer will expect and demand that the Realtor is a specialist in every phase of the home transaction. Instead of keeping the names of service providers as referrals, the Realtor will be expected to make recommendations on a wide variety of topics that will require a working knowledge of loans and finance, budgeting, home repairs, negotiating, and inspections.

Those educational needs may also include the ability to speak a second language. Because current figures indicate that over 90 percent of homeowners are white, middle class Americans, the industry has been in no hurry to attract agents from other backgrounds who may understand other cultures and speak a second language.

Again, demographics have shifted radically. Minorities have grown from one in five U.S. residents in 1980 to one in four in 1995. In 1995, one third of all minors in the U.S. were African American, Hispanic or Asian. In less than five years, these young people will be the first wave of the minority buyer explosion.

Some brokerage firms are preparing to serve this underserved demographic. Century 21 has created an Hispanic Task Force, made up of brokers in strategic markets throughout the country which is designed to address the needs of the Hispanic marketplace, the fastest growing demographic in the United States. On a local level, other brokers are following suit.

In Dallas, market dominators Ebby Halliday REALTORS and Henry S. Miller, REALTORS are preparing to serve not only the rising Hispanic demographic, but a growing middle Eastern, European, and Asian market. Both companies have recently appointed task forces composed of foreign language speaking agents with as many as twenty tongues represented. According to recent homebuying trends in the Dallas/Fort Worth Metroplex, over 100,000 potential home buyers and sellers from international communities moved to Texas in 1997, with nearly 15,000 settling in Dallas County.

Younger Realtors are only just beginning to play catch up to their senior mentors in terms of market knowledge, but they may well surpass the aging Realtor in terms of overall knowledge and service delivery.

One of the biggest changes to evolve in the industry that is meeting heavy resistance from the traditional Realtor is the emergence of buyer agency. A direct threat to the self-serving dual agency business model, buyer agency is a market response to the numerous buyers who are not only taking charge of looking for their own homes via the Internet, but insist on true representation at the bargaining table.

Addressing the buyer agency trend without rocking the traditional agency boat is the Real Estate Buyer Advocacy Council (REBAC.) REABAC offers the only NAR-sponsored designation for the buyer agent - the Accredited Buyers Representative(ABR) designation, but bearers of the designation can still represent sellers as well as buyers and participate in both sides of any real estate transaction.

Taking a more radical stance is The National Association of Exclusive Buyer's Agents, a non-affiliate of NAR. This organization supplies its members with education and a code of ethics to implement and insists that members and member agencies serve sellers in no way whatsoever. Indicating a slowly growing shift in philosophy are NAEBA members who retain dual memberships in both organiazations. Approximately 50% of NAEBA members are also Real Estate Buyer Advocacy Council (REBAC) members.

It should come as no surprise that the average membership age in NAEBA is almost a decade younger than that of the general NAR membership.

If these new demographics and customer service demands for unique services such as buyer agency are not properly served by the broker, the current and next generation of home buyers will find other means, including non-human, to get the information and service they want in the real estate transaction.

Read Part I