Choosing a brokerage that is most suitable for you as a realtor is an important decision, especially at the beginning of your realtor career.
So, in this context, you might have already heard about the cloud-based brokerage called eXp Realty and you’re now a bit on the fence with regards to starting out with them or changing your current one.
Therefore, I wrote this article in which I cover several important aspects of eXp Realty with a focus on their partially controversial business model.
Besides their business model which I cover more in-depth, you will learn about what eXp Realty is, how it started, what their commission split is, if they provide you with leads, how long it takes to join them, how realtors make money with them, and the reasons why realtors leave this brokerage.
Sounds interesting, so please keep reading.
What Is eXp Realty?
eXp Realty is part of eXp World Holdings Inc. and an agent-owned cloud-based brokerage. About 60,000 agents form part of the organization, which spans now across the whole world.
It also offers their agents the option to become a shareholder and provides – in their words – a generous commission structure.
How much stock you get as an agent depends on your performance as an agent, such as closing your first transaction.
As an agent, you also don’t have to pay any desk fees or royalty fees and you can keep between 80% and 100% of your commissions (source).
Don’t worry, I will get further into their business model and commission structure below.
Besides eXp Realty, eXp World Holdings Inc. is also the owner of three other businesses: Virbela, SUCCESS Enterprises, and Showcase IDX.
Virbela has everything to do with virtual and remote collaboration. As a user, you can host virtual events, hold classes, meet, and work with your virtual team.
The difference to other solutions is that this all can be done in an immersive 3D world.
SUCCESS Enterprises is basically a complete media business with different media or marketing channels.
Part of it is the magazine SUCCESS and the website SUCCESS.com.
I looked into this a bit further and from what I could find, SUCCESS covers print content marketing with its magazine, digital content marketing with the website or blog articles, audio content marketing with its podcast and video content marketing with its YouTube channel.
So, overall, I would say that their focus is clearly on content marketing, but across several different channels at once.
The third business is Showcase IDX.
You might have read about this one already on my blog in my various articles about IDX.
My article about how to integrate your MLS into a WordPress website is especially relevant in this context.
ShowcaseIDX is a premium WordPress Plugin that helps you to integrate your MLS via IDX into your WordPress-based real estate website.
When Did eXp Realty Begin?
The founder Glenn Sanford started with eXp Realty in 2009 right when the real estate market implosion was still fresh.
Before his success with eXp Realty, he worked at Keller Williams leading different real estate teams across the country.
The economic downturn of 2009 impacted his business and team greatly, but he used this crisis situation as a chance to reconsider the real estate brokerage business model as a whole.
The consequence of this critical analysis was the foundation of eXp Realty.
What Is eXp Realty’s Business Model?
By now, you might ask yourself what eXp Realty’s business model is.
When talking about business models, we always need to ask the question about the different elements they include.
And in my opinion, the best structure is provided by a system which also exists in a book called “The Business Model Canvas”.
Based on the structure provided by this book, I will answer the question about eXp Realty’s Business Model.
By the way, by reading this section of my article and buying and reading this book, you might even get inspired in such a way that you will be the next one innovating a real estate business model.
Because the book does a great job in showing you how you can innovate different elements of a business model.
eXp Realty’s Business Model at a Glance
1) The Value Proposition
At the core of the business model canvas is the value proposition, from which all other elements derive.
eXp Realty’s value proposition is the following according to their website:
“eXp offers a highly competitive compensation package, a unique cloud-based model and a tremendous global community of agents who collaborate together.
Layer all of this with state-of-the-art technology, forward-thinking leadership, mentorship, training, and networking, and an eXp agent’s success is only limited by their own choices. eXp Realty’s agent value proposition is about compensation, community and it’s cloud-based.
That’s why it’s the most agent-centric brokerage in the world. “
The key difference to the traditional brokerage that generates the value for their main clients (the agents) is their generous commission structure and further compensations and their cloud-based virtual approach with no physical offices and no franchising approach.
2) Customer Segments (Audience)
Based on the value proposition, we can clearly identify what their audience or customer segments are: firstly, their agents and secondly, real estate buyers and sellers.
3) Customer Relationships
From my research, I could also identify several ways they establish and maintain their customer relationships.
It’s a mix of dedicated personal assistance, self-service, automated service, and communities.
The latter is realized by their sister business Virbela where the whole teamwork can be done remotely in a virtual 3D environment.
Also, their other sister business – Showcase IDX – is used to provide their agents with a great start with a complete WordPress-based real estate website including the MLS IDX integration via Showcase IDX (source).
In terms of channels, we need to answer the question of how the main audience wants to be reached.
I highly assume that eXp Realty reaches their main audience (real estate agents) via word-of-mouth and networking and less through direct advertising campaigns.
I guess it started with the founder being well-connected with Keller Williams and other agents from there.
5) Revenue Streams
eXp Realty’s main revenue streams come from commission splits (20%) capped at $16,000. Everything above is 100% for the agent.
The next streams are different one-time, monthly, and transaction-based fixed fees, such as a $149 start-up fee, an $85 per month cloud brokerage fee, a $25 broker review fee per transaction, and a $40 risk management fee per transaction.
Further Elements of the Business Model Canvas
Further elements of the business model canvas include key partners and business boosters (e.g. unfair advantages, etc.), key activities, key resources and the cost structure derived from the elements mentioned before.
These are elements linked to the inner workings and what goes on behind the scenes.
When it comes to these elements, I understandably don’t have and shouldn’t have access to them, as well as the competitors shouldn’t.
It’s basically the whole left side of the business model canvas, which you can take a look at here.
What Is eXp Realty’s Commission Split?
By now, you might also wonder what the eXp Realty commission split is. I mentioned it already above in passing.
As a real estate agent with eXp Realty, you receive 80% of the total commission, and 20% goes to eXp Realty.
Once you reach the gross commission amount of $16,000, anything above is 100% the agent’s commission.
You still will need to pay the transaction-based fixed fees, which are the $25 broker review fee and the $40 risk management fee (source).
Does eXp Realty Provide Leads?
The question of whether eXp Realty provides leads to agents was of particular interest to me, to see if they provide their agents with some lead generation services or solutions.
eXp Realty doesn’t provide a number of leads that would make a real estate agent’s business feasible.
How many leads you get depends on the number of agents that share the same local market.
It’s more like the example of the man who learns how to fish instead of the man who gets fish without doing anything.
With eXp Realty, you get access to the kvCore platform, which is a real estate CRM solution with a focus on lead nurturing through different communication channels (e.g. email drip campaigns, direct mailing via postcards, etc.).
During my research, I couldn’t find anything that indicates that massive quantities of new leads would be generated by this platform. But what you get is more than 50 hours of weekly live training and access to a “how-to” video library.
So, I wouldn’t count on eXp Realty providing you with a large number of leads. The main lead generation part would be on you.
Interestingly, I expected a little bit more lead generation services for their agents, since their sister business (SUCCESS) is a media company that relies heavily on content marketing across different marketing and communication channels (e.g. articles, audio, and video).
I am not sure why they wouldn’t exploit this for real estate lead generation.
How Long Does It Take to Join eXp Realty?
It can take between 2-5 business days to join eXp Realty. The average is about two business days.
Why can’t you join immediately?
The reason why you can’t join immediately is their vetting and onboarding process for new real estate agents, which consists of the following steps (source):
- You send your eXp Realty Join Application here.
- Signing the eXp Realty Independent Contractor Agreement
- Signing the eXp Realty Independent Contractor Agreement by eXp’s internal team
- You transfer your license.
- You set up all of eXp Realty’s systems and tools.
- You are a new real estate agent with eXp Realty.
How Do You Make Money with eXp Realty?
With eXp Realty, you can make money in three ways, namely by earning commission by selling real estate (the obvious one), getting a revenue share, and becoming a shareholder.
The first one I won’t mention, since it’s quite obvious. When you sell real estate as a realtor, you will get a commission based on the transaction.
The second way to make money is receiving revenue share for real estate agents you bring on.
In this case, you will receive revenue on their first transaction, and additionally a residual income of up to $2,800 per productive agent that is part of your team.
It doesn’t stop there – you will also receive a revenue share for further agents these new agents bring, in turn, to your team.
In this respect, eXp Realty resembles a bit of a network marketing or MLM scheme.
If the company would only do that and you would also have to buy a certain amount of products or services to get in, the term would have its merits.
The third way to make money with eXp Realty is to become a shareholder.
Once you have your first successful real estate transaction, but also when you achieve certain goals, you will get company shares.
Why Do People Leave eXp Realty?
To not have an overall rosy and rainbowy article, I also want to mention what I found out about why people leave eXp Realty.
There are the common reasons why agents leave brokerages, such as the usual going out of business (87% of agents fail in the first three years, source), recruitment by other brokers, and too high expectations.
But I also wanted to know the reasons why some left eXp Realty specifically.
The above reasons are the rather generic reasons agents leave brokerages.
So, I researched a bit further and found an interesting Reddit thread where some agents reported about their experiences.
Please take the reports with a grain of salt, since it’s only anecdotal and subjective evidence, not empirical statistics.
“Here’s the truth – Revenue share is a fucking joke. It’s pathetically low. I’ve peeked behind the curtain at the 1% recruiters at exp and they aren’t making insane amounts of money.
The 1% of the 1% are (Brent Gove, Gene Frederick, and a few others), but most aren’t making shit.
I think it’s a good model for a very specific type of agent. One who is independent and a self-starter, but with no systems.
Honestly, the fees are a big reason we left. Little piddly fees are annoying to agents.”
“I left because it took them six weeks to track down my commission check and then just stopped answering my emails. I couldn’t call anyone because even my broker didn’t have a phone number available.
I had to go into their stupid virtual world to get answers from someone who eventually called me. Six. Weeks. Later.”
“Being a closing agent, my experience with them is that they look to cut a lot of corners. I have been in very uncomfortable situations twice at different EXP offices when a closing is going sideways.
They have tried to bully me into passing out checks when the transaction wasn’t complete.”
Summarized from the three non-representative negative experiences you could say that they mainly left because of wrong expectations (e.g. too low revenue shares), the fixed monthly fees, and sub-optimal transaction communication in some cases.