Last year, financial guru Dave Ramsey gave all eXp real estate agents the option to disassociate with eXp Realty or be fired from his firm. This feud ignited critical conversations about referrals throughout the real estate world. So why did entrepreneur Dave Ramsey decide to offer eXp agents the ultimatum to find another brokerage or cut ties as a Dave Ramsey ELP? And how did eXp agents working for the brokerage respond? In this article, we’re going to take a look at each party to understand where the conflict began, as well as look at the valuable insights we can learn from it for the future of eXp Realty and the real estate industry.
About eXp Realty
eXp Realty is one of the fastest growing real estate brokerages in the world, with over 70,000 exp realty agents working worldwide. One reason why they can grow so rapidly is attributed to their revenue share model. For each agent that joins eXp Realty, the recruiting agent will receive a capped percentage of their commission.
The model benefits agents because they can create passive income streams by recruiting other agents to help families and individuals buy or sell their homes. Equally, it rewards the agents for their boots-on-the-ground efforts, the growth they help the company achieve, and the value they offer to customers.
Within the revenue share program, the agents are the ones providing a valuable customer experience and generating revenue in commissions. The eXp model believes these agents deserve the remuneration for the value they provide to the customer and their work in growing the company.
About Ramsey Solutions
Dave Ramsey is a well-known financial advisor who offers guidance and direction about financial matters to his clients. Ramsay Solutions was established in 1992 and operates multiple affiliate programs, including real estate, tax services, and other financial solutions.
Through Ramsey’s Endorsed Local Partners (ELP) programs, he offers costly referral programs directing high-quality leads to real estate agents and other partners, semi-passively profiting from the lead referrals at the same time.
How Referral Programs Work
Referral programs broadly operate around a concept that incentivizes people to recommend services to a network of others. Among other affiliate services, Dave Ramsey offers a referral program to connect families seeking to buy or sell a home with real estate agents. Agents that sign up with his business pay high referral fees to Dave Ramsey with each new deal they close.
The process is by no means new or unique, however, it can be effective when strong partnerships are built. Ramsey has a large network with a vast pool of high-quality leads. Therefore, agents participating in the program are generally successful top-tier agents who have the professional capacity to manage large numbers of inbound leads.
The History of Dave Ramsey and eXp Realty
eXp and Dave Ramsey have a long history of collaboration, and both parties benefit from the alliance. In 2010, eXp Realty acquired Ramsey Solutions as a strategy to manage growth reduction in Ramsey’s business. The deal took place without disclosing the terms of the arrangement to investors and without any outside influence. While Dave still owned Ramsey Solutions, he had no control over either company. Both parties profited from the acquisition.
In 2021, eXp agents working with the Dave Ramsey Endorsed Local Partner program received communications that they would have to find an alternative local brokerage to continue access to his lead referral program or be fired.
Dave Ramsey vs eXp: What’s The Conflict?
The dispute began in 2010 after eXp realty acquired Ramsey’s company, Ramsey Solutions. David Alessandro, eXp Realty’s company president, has said that he is aware Dave Ramsey did not like him or his brokerage in an interview with Rich Dad Radio’s Tim Rosenzweig.
Dave Ramsey, on the contrary, believed that it would be strategic to take a personal or professional bearing in opposition to another to become differentiated as competitors. Ramsey then took an aggressive stance against eXp Realty by telling agents that unless they switch brokerages they would no longer get any leads.
There are a number of theories that exist that attempt to explain why Dave Ramsey took such a strong stand against specifically eXp. One theory is that he has a pre-existing conflict with Grant Cardone, a figure who helps real estate agents with sales training and referrals, and who recently affiliated with eXp Realty. By following both of their respective media trails, it’s evident that Cardone and Ramsey exist on opposite sides of the fence.
Dave Ramsey: Accepting Expensive Referrals
During an interview with Rich Dad Radio, Ramsey had stated that he was only interested in referring eXp agents working exclusively for the brokerage company. The value was in setting themselves apart.
However, once Dave had accepted very expensive referrals from eXp Realty, he grew distant and decided to take a stand against them. More recently, Dave has said that he would provide his clients with the names of local agents if they sought someone else (not affiliated with eXp) to work with.
What is Next for eXp Realty?
Glenn Sanford eXp’s founder is reported to have said he didn’t know how big a deal Dave Ramsey was. His team of lawyers is reviewing the situation, though no formal lawsuit appears to be in planning.
While ending the relationship with eXp Realty is legal, the question of why exactly Dave Ramsey has actively decided to stop working with the brokerage remains a mystery. Both parties will likely financially lose out from the cut ties, however, eXp is strong enough to withstand the blow to its lead referrals.
This means that eXp Realty agents making huge money in residual income from the Dave Ramsey leads would need to find other lead sources to secure their business. There are many ways a real estate agent can generate high-quality leads without paying for very expensive referrals, and Glen Sanford – recently having bought Success Magazine – is reportedly building a competing referral program with eXp.
Summary
While the feud between Dave Ramsey and eXp Realty appeared to come out of the blue, it has left a wake of critical discussions in the real estate world. What’s the issue with referral programs, and should they be engaged in the future?
Because eXp is the fastest-growing brokerage in the history of real estate, it could be seen as a force to be reckoned with for marketing or exposure purposes. However, at the end of the day, the firm is resilient enough to take the blow and move ahead with a strong stance.
eXp will continue to support its agents and their success with referral programs, as well as reward them with the hard work each is doing for themselves and the company. If you’d like to speak with an agent about what eXp can do for you, contact Traci Gagnon today.
