The market for real estate has been scorching hot over the past five years. Demand continues to climb while supply remains limited. In fact, the demand for existing homes has climbed so high that the average price for a resale property is greater than a new build, at least in most markets. Robert Dietz from the National Association of Home Builders points out that this dynamic has only occurred a handful of times over the prior few decades, signifying a high demand for home ownership now rather than later.
An increasingly hot real estate market means primarily one thing for real estate agents – their workload is about to get a lot more intense, especially now that interest rates are forecast to drop in the coming months. Realtors are historically overworked in their profession to begin with, and the intensity doesn’t promise to abate any time soon. As an HR leader, you are probably already placing prudence into future manpower tactics, because you know what happens when employees are overworked. Let’s take a look at the HR challenges in the real estate industry to see what you are up against.
1. Turnover
When any average person thinks of real estate employees, this is probably the first thing they think about. Turnover has historically been a problem in this industry, as the stress, long work hours, and unpredictability of success pushes people away. Pioneering your own economic future is a concept that is enticing for many who are getting into real estate, but those dreams become quickly shattered when success isn’t automatic. Frustration and despair builds resentment, and the situation is resolved only when that individual exits the field and continues in a different industry and job.
While there are other reasons why agents leave the industry, the unpredictability of success makes up one major part of the 88% of realtors who leave the job in the first year. In total, real estate/property management sees a total employee turnover of around 35-40%. This is, no doubt, the most frustrating yet expected challenge for HR departments.
2. Shared Responsibility
If “being your own boss” remarks upon the positive side of the real estate industry, then “dog eat dog” easily explains the dark side. When it comes to sales – any sales – the propensity for Machiavellianism rises significantly. Some fight for a share of the sales and some fight to survive. The losers exit stage right. Teamwork becomes a virtue that is often lost when trying to keep your head above water.
The loss of shared responsibility cannot be fully blamed on the behaviors of the staff, however. In a sector that encourages and expects their employees to build their own brand, those employees are assumed to manage it all, often left without the skills and support needed to run a business. Someone outside of the industry might think that a real estate agent just shows homes, writes offers, and hands over the keys after closing (and if this were true then turnover certainly wouldn’t be a problem). However, support services, such as marketing, paperwork management, vendor meetings, and the related software skills necessary to perform these functions are usually not readily available. Thus, the agent is tasked to manage each function on his or her own. Given that many of these responsibilities are specialized, it is safe to assume an agent will never master it all.
By not fostering a supportive environment that seeks to promote and positively reinforce shared responsibility, employees will become disengaged and disenfranchised. Instead, when an employee contributes a skill to benefit everyone, you build teamwork and camaraderie, which then introduces a culture in which staff want to stay and participate.
3. Technology Migration and the Digital Age
To segue from the point above, we are living in an increasingly digital age. The more out of touch you are, the less likely you will advance forward. We are now seeing the rise of artificial intelligence, and as we grapple with the best ways to integrate this technology into our operations, one thing is becoming clear – if you do not adopt, you can become quickly left behind. This does not mean that you need a PHD level knowledge on AI implementation, but you do need to utilize the technology where necessary to increase efficiencies (to a certain degree, of course).
A properly built CRM will assist agents in communication and lead nurturing. Software will decrease time writing offers and other important documents. A well-functioning website will better engage shoppers and lead to higher conversions. These are just a few examples of modern vital technologies that real estate businesses need to compete. How do you, as an HR leader, provide training and development to help your staff? Without understanding how the tools work, the door for growth can slam in your face (pun intended).
4. Compliance
In any HR challenge checklist, compliance will be listed every single time. It is natural for leaders to forecast ideas and build strategies before considering law, because leaders want to execute plans that win. However, careful prudence must be exercised to ensure these plans remain within the bounds of the governing law. The real estate industry is already bogged down with things like taxes, licensing, and other rules that create mounds of paperwork. Adding extra human resources compliance mandates on top of this further adds to the stress of not just HR departments, but the industry as a whole.
A specific compliance challenge in the real estate sector relates to employee classification. It is not uncommon for a real estate brokerage to employ both full-time staff and third-party contractors. There are rules that govern treatment, protections, and benefit eligibility depending on the role assigned, and if your firm is not compliant, you are at risk for penalties and fines. This is just one example of the many challenges you may face. Your department is responsible for following all the laws that govern human capital – equal opportunity, FLSA, OSHA, ACA, etc.
5. Wellness
When talking about wellness, we are not talking about the up-and-coming trend of wellness real estate, which has some interesting merits on its own, but instead the well-being of your staff. As alluded to earlier, agents and other staff are subject to long hours, stressful deadlines, and unpredictable incomes, which greatly affect their well-being and behavior. An older study shows that realtors have the second highest diagnosed rate of clinical depression out of any professional occupation.
What does this mean for HR? Wellness programs have become a common component of any good HR strategy, but these tactics can only go so far at increasing employee mental well-being and productivity. When you have such a large percentage of your workforce suffering from a diagnosed anxiety or depressive disorder, it becomes much more of a challenge to implement programs that work. At times you may even need to take extreme measures like emergency intervention or hospitalization, especially if an employee becomes a danger to themselves or other employees.
Recognizing early symptoms, creating a mental well-being checklist, and encouraging proper emotional hygiene can act as buffers to avoid a major downturn. Additionally, you may want to regularly promote resources employees can utilize when they begin to feel the need for help. There is still a large stigma associated with seeking behavioral health services; maintaining privacy is key.
6. Remote & Travelling Workforce
Because your product cannot physically move, realtors are commonly travelling and working remotely. They may need to show a property to a high value client outside of the city in the mountains at 5 but have an offer sheet drawn up for another client by 6, or phone into a company-wide meeting at 10 and meet for a closing at 11. Tracking this movement, whether it be compiling mileage reimbursement for payroll, ensuring accurate punches, or even tracking commissions becomes the problem of the HR department. Our workforce, in general, is moving into this more flexible sphere, so it is not difficult for us to adapt to this growing trend. However, as mentioned previously, agents are already busy and stressed and they may overlook tracking their own movements.
HR Outsourcing in the Real Estate Industry
These HR challenges in the real estate industry may seem overwhelming when spelled out. The good news is that you are not in this alone. There are many HR resources and industry-specific assets that are available at the access of your fingertips. More importantly, there are agencies who specialize in handling human resources for real estate businesses, whether it be managing payroll, covering your ACA compliance, or supporting your everyday operations so you can focus on building those wellness tactics mentioned above.
A dedicated HR outsourcing firm will partner with you and your HR department to set you up for success. They handle many of the day-to-day tasks that may feel rather tedious and take you away from growing your department as well as the business itself. By taking over these functions, you are given more time in your day to tackle the hard-nosed strategies you may not have time to build otherwise.
At Corban OneSource, we have been partnering with mid-sized businesses across the United States for over 29 years. Our benefits administration, managed payroll, and HR services have lifted the burden from HR leaders and allowed them to focus on what truly matters. We help your HR department stay compliant, manage your benefits programs with the brokers you choose, and report timely and accurate payroll. The best part is that our services typically generate up to 32% in administrative cost savings when compared to utilizing internal teams. Reach out today for a free consultation.
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