Real estate agents have been around for 100 years, who will survive the next century?
100 years ago, the U.S. passed its first law regulating real estate licensing and the agent profession officially came to be.
At this notable milestone for real estate agents, their future is under attack. Tech startups tout big plans for a market takeover. Real estate companies with new-fangled platforms and business models joke about the agent’s extinction. The doubters are loud and in many cases well-funded. However, it’s nothing that real estate agents haven’t heard before.
To be clear, not every agent will have a seat at the table forever. The next century will usher in new technology, increasing consumer demands and housing market ups and downs. Those agents who thrive will swim with the shifting tide rather than against it. They’ll be the honest Abes, at your service and tech-equipped, ready to help a client regardless of their personal motivation to “get the listing” or cash in on a commission to pay the bills.
But to understand the future of the agent, let’s first hop in the DeLorean and go back in time.
How “real estate agent” became an actual job
The real estate agent profession didn’t form out of thin air. According to a report from the California Department of Real Estate, urbanization made negotiations over property and land between strangers more complex at the turn of the 20th century.
This created the need for an objective and knowledgeable intermediary to guide the public through the basics of a real estate transaction and help shake out a fair deal.
Around 1900, brokers started showing houses for sale. At that point, though, there were no licensing requirements and the business turned into a complete free for all. The competition in a disorganized environment bred questionable business practices and a consequential lack of trust.
This led to the first attempt at establishing real estate licensing law in 1917—which promptly failed in the courts. Finally, in 1919, the Supreme Court upheld the Real Estate Act, first adopted by California and later in some form by the remaining 50 states. (The requirement for a written examination didn’t crop up until 1923.)
Real estate agents then and now
Fast forward to 2019. The latest research shows 90% of consumers still use an agent to buy and sell their homes even as doomsday analysts predicted their extinction through the decades.
Although the real estate industry evolved with the advent of online home listings, virtual walkthroughs and iBuying, the fundamental role of the agent is the same now as it was in the 1900s: help people navigate what’s often the largest financial transaction of a lifetime.
One thing industry leaders can agree on, however, is that the real estate arena is too crowded.
The Association of Real Estate License Law Officials estimates there are 2 million active real estate licensees in the U.S. The National Association of Realtors, the largest trade organization in the country, reports having 1,383,010 Realtor members as of July 2019. For comparison’s sake the insurance industry counts 1.1 million brokers and service employees, while there are 1.35 million lawyers and 1.1 million doctors in the U.S.
The barrier of entry to the agent profession remains low, which encourages people of all experience levels to give the gig a try. If you’re over 18, complete any pre-license education required by your state, and pass a written exam, you’re in business.
Making a living as an agent is more difficult. Agents work on commission and have to generate their own clients. Despite the prevailing image of the luxury agent who drives a fancy car on TV, agents make on average $47,910 a year, according to PayScale.
Although the profession has survived the test of time, the industry agrees that the concentrated pack of agents jockeying for business will thin out moving forward as lower-producing agents drop out of the mix and technology changes the game. Agents face increasing pressure to show value and adapt to the changing needs of consumers if they want to find success in the next century.
Say you ran into an all-star agent 50 years from now and asked them, “What’s your secret?” They’d no doubt talk to you about how they:
Save their clients time and hassles
Today it’s commonplace for both Mom and Dad to juggle work and home life. According to the most recent data available from the Pew Research Center, the number of dual-income households with kids under the age of 18 in the U.S. has risen from 47% in 1980 to 66% in 2015, while more than half of parents both work full time. Data from the Labor Department shows that one-third of Americans work at least 45 hours a week while 9.7 million clock more than 60.
Americans will always come up short on time, so agents who prove their ability to boost efficiencies and offer flexibility to clients will provide enormous value.
Imagine the agent who:
Hosts virtual showings from the office so that buyers can rule out unsuitable properties faster and sellers only see serious buyers book a tour.
Connects clients with an AI chatbot that matches them with available properties based on their preferences, narrowing down their list of “maybes.”
Ditches the combination lock box and embraces self-guided tour technology akin to Rently or ShowMojo, which have become popular self-guided showing tools in the rental space. This could open up a property’s showings hours, accommodate more buyers, and secure an offer on a house faster.
Manages paperwork with digital closing and escrow tools and sets up the client with video notarization software so they can skip the trip to the bank.
Uses blockchain-enabled smart contracts to encrypt sensitive client information.
Accepts cryptocurrency on current listings.
As technology solutions mature and go mainstream, successful agents will lean into the Ritz Carlton white glove service and know when to let tech step in and do what they can do faster and better.
Take agent Ryan Lidholm, an agent of just three years who’s already climbed to the top 1% of his market. For one of his listings this year, he handled the home’s cosmetic repairs, took amazing drone photos of the land, and sold his clients’ Missouri home in eight days.
All the while, these clients roamed the U.S. in an RV. Email updates were all the sellers wanted and Lidholm kept them posted while he coordinated every step. Agents who take ownership of the deal and give clients’ hours back in their day aren’t going anywhere.
Integrate online and offline marketing
In 2013, marketing professionals surveyed by Adobe said they believed that marketing had “changed more in the past two years than the previous 50.” Five years later and the pace of innovation hasn’t slowed. Marketers have hundreds of channels to choose from.
Big platforms roll out new algorithm changes, designs, and features every day. In 2019 alone, Google+ sunsetted, the video-sharing app TikTok reported 500 million users and Facebook restricted ad targeting for housing and credit ads.
Real estate agents who can’t keep up with the changes or fail to leverage these powerful platforms for their clients’ business won’t make the cut. They’ll need to use video to capture a condo’s best views, or use Facebook Live to give virtual house tours. Early adopters who aren’t afraid to tackle emerging platforms that no one above the age of 18 has heard of will stick around.
Gary Vaynerchuk, who bought the keyword “wine” for 10 cents on Google AdWords, built a huge YouTube audience, and started using Snapchat before it was cool, preaches this “get in early” advice to anyone who’s trying to connect with people, generate clients, and create a brand.
At the same time, agents will still need to balance out the marketing mix with multiple offline tactics. Take the agent who creatively helped to sell the mansion of a motivated luxury seller.
She threw an event where she displayed her company’s latest collection of diamonds, which ultimately attracted a rare buyer from London.
The agent of tomorrow knows when to post a giphy and when to party like Gatsby.
Push creative bounds, but avoid tasteless stunts
The web is a noisy place, and some agents have taken risks and found success with out-of-the-box ideas: giant T-Rex costumes in listing photos; selling a suburban house, sex dungeon and all; or paying $50,000 for a video that spoofs “Teach me How to Dougie.”
But the internet is also unforgiving. An agent who could once recover from a media slip up or comment in poor taste can’t just fade into anonymity. Instead, they will face a more or less permanent track record on Google and suffer repercussions from their broker who is upheld to an equal standard from the public.
Team Denver Homes thought its July 2019 “Fresh Prince of Bel Air” rap video would drum up positive attention. Instead people saw the lyrics they chose to insert as glorifying gentrification.
The overseeing independent brokerage, Kentwood Real Estate, cut ties with the top-selling team after the video was released, saying in a statement to local Denver media outlet 9News: “We have a 38-year record of being an inclusive, equitable, professional and empathetic culture.”
Brokerages and teams who prioritize diversity and consult others who challenge their own ways of thinking will be in a better position to prevent these flubs from ever happening and help separate creative ideas from offensive ones.
Throw out ‘always be closing’ for ‘always be advocating’
Whether real estate agents should be thought of as trusted advisors or salespeople is a time-honored conversation in the industry.
As consumers give more weight to unskewed agent performance metrics and transparent client reviews available online, the agents of the future will have to prioritize service over sales. They won’t be able to “cheat” the system with quick and dirty tactics. If they rush a buyer to make an offer or give a seller an inflated price to “win” the listing, that karma will come back around.
The top performing agents will tailor the solution they provide to the client’s needs. They’ll be able to identify which upgrades will yield the highest returns, connect clients with the best contractors in town even though nothing’s in it for them, tell a buyer that a house is out of their budget, or even step away from the sale and recommend alternative routes if a market process won’t serve the client well.
Work in harmony with iBuyers and home trade-in solutions
Say a client has to move swiftly for a job relocation or is stressed over how to time the sale of their current house with the purchase of a new one. Agents who become experts on all of a client’s available options will add value and find purpose even in a changing real estate landscape.
They’ll come from a place of knowledge in the greater industry to say things such as: “Have you heard of the alternative financing options available today? I know a company that will buy the house you want and put it on reserve for you. Would you like more info?” Or “Since you’re in Atlanta, you should see what Opendoor would bid on your house. Here’s how iBuying works. I can refer you.”
Agents will remain a first point of contact for many real estate consumers and those connections will help support ancillary businesses in the space. Agents should take advantage of the opportunity to earn money on the referral while knowing they put the interests of their client first.
The century of the agent
100 years of agents. Let that sink in a minute.
From the Great Depression to the 2008 financial crisis, from country roads to a sophisticated highway system that paved the way for the suburbs, from word of mouth listings to Zillow.com, real estate agents were there.
They’ve shuttled buyers from house to house, entered vacant homes at their own risk, and given tough love to many a seller on an unrealistic price. They’ve called contractors and scrubbed bathtubs and made store runs to pick up a new shower curtain in time for the open house. They have, over the course of an entire century, helped people of all walks of life buy and sell homes.
Happy centennial birthday, real estate agents. May you take on the next 100 years with the same scrappiness, adaptability, and heart that you have shown since 1919.