| October 30, 2002 |
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Agents report that it is getting more difficult to disclose buyers about agency, get buyers under representation agreements, and otherwise get them committed to working with just one agent. Some can't even commit to a house, and demand escape clauses to be inserted into contracts, leaving the agent to sweat out the option period not knowing if the sale is real or not. Why is working with buyers getting to be so hard? All of these problems boil down to one issue - trust. The real estate industry wants it, but they aren't getting it from buyers, even though the industry is working at eliminating some of the problems. Here are just a few of the problems between agents and buyers. The Generation Gap Buyers today are significantly younger than their agents, with a different set of values. According to the National Association of Realtors 2002 Profile of Buyers and Sellers, the average homebuyer is 36 years old. NAR's 2001 Member Profile study showed the average Realtor to be 52. According to information studied by CRS course designer Bonnie Sparks, age is an important indicator of attitudes and values. The GenX homebuyer was a latch-key kid, she says, left alone while both parents or the single parent worked. He created "family" with his peers. In the '80s and '90s, he saw his parents laid off by companies they had worked for their whole lives. The parents had to reinvent themselves with continuing education and new careers to stay employable, putting them right back into competition for the same jobs that the GenXers were grooming themselves for. For this reason, GenXers tend to distrust institutions and brands and are unwilling to give loyalty easily. Their motto is "Question everything." Making buyers even more sensitive is the fact that 42 percent of buyers are first-timers. They are a full ten years younger than repeat buyers, and accounted for 2,916,000 home sales in 2001. When a GenXer meets a Boomer agent - who do they see? The workaholic parent who was too busy to care for them, or the big corporate giant which is only interested in profits at the expense of people? Unless brokers take drastic steps to recruit younger agents, the age gap will continue to grow. Buyers are getting younger while Realtors are getting older. The average real estate buyer is 36 years old - three years younger than in 1999. And the median age of sales agents is 50, up from 42 years of age in 1978. The answer for existing agents, who obviously can't turn back the clock, is to get up to speed on generational issues and communication styles that will work better to serve the GenX client. Organizations like the Council of Real Estate Brokerage Managers are organizing classes that help train agents in generational differences and solutions. Also, trainers like Michael Russer, Robert Wendover, and Gary Onks have written extensively on the subject and can offer further insights. The Service Gap Disclosure and agreement statistics show clearly that buyers do not trust agents, which means they don't trust their business models. The NAR 2002 Buyer/Seller Survey says that more than half of homebuyers asked them to sign an agency disclosure form indicating whom they represent in the transaction. Only 35 percent signed at the first meeting, and 26 percent when the contract was written. While it is unclear whether the agents showed the disclosures in all cases, only half of the buyers who were shown a disclosure chose to sign it. Similarly, nearly half of buyers chose to sign buyer's representation agreements where the agent represents only the buyer. Half of agents in the transactions surveyed work as both buyer's and seller's agents. And 14 percent represented buyers only, yet when it came to understanding whether or not the buyer was exclusively represented, nearly four out of ten buyers did not know the answer. The number one job buyers wants an agent to do, according to NAR, is to help them find the right home, then help them with price negotiations and paperwork. First-time homebuyers want help figuring out how much home they can afford. Maybe that is a place to build from. For first-time homebuyers, almost half chose a real estate agent because s/he was referred by a friend, neighbor or relative. Less frequently, repeat homebuyers used a referral, and twenty percent used the agent who had helped them before. For both first-time and repeat homebuyers, ten percent chose an agent because the agent contacted them in some way. Perhaps the best defense is building up a network of referrals where you as an agent treated everyone in the transaction fairly and they will want to recommend you. The Cultural Gap While the NAR found that cultural barriers made it difficult to complete transactions made it difficult in only three percent of transactions, the lack of diversity in the real estate profession can't help but draw attention to a widening cultural gap. Overwhelmingly, agents are white. Only two percent are black and two percent are Asian. Five percent of Realtors are of Latin, Hispanic, or Spanish backgrounds. According to the National Association Of Hispanic Real Estate Professionals President and executive director Ruben Garcia, says that 80 percent of Hispanic homebuyers last year were first-time homebuyers, many with language barriers. While his organization hopes to address the gap by encouraging more Hispanics to become real estate professionals, the NAR is also encouraging diversity. In 2000, 19 percent of Realtors conducted at least one percent of their business in another language besides English. The Electronic Gap Seventy-five percent of agents have e-mail, but many do not treat it as the ringing phone that it is. While the NAR reports that seven out of ten agents used e-mail in their transactions, buyers' number one complaint about agents is that they don't answer their e-mail promptly. This harkens back to generational differences. The Boomer agent is a face-to-face sort of businessperson. The GenXer is content with an electronic relationship, but expects service professionals to be proficient with e-mail. Many agents are getting more comfortable with e-mail, but until they can deliver information faster and with more detail than the buyer can get it himself, a gap will continue. |
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