What Is EXP Realty?
- EXP Realty is the largest residential real estate brokerage geographically in North America. It is also one of the fastest-growing firms worldwide with more than 75,000 agents spanning the globe.
- EXP Realty is an international leader implementing cutting-edge technology and is famous as an agent-owned cloud brokerage. EXP Realty agents are considered the core of this real estate agency.
By becoming shareholders, their real estate agents establish their own brand all over the world. They are granted access to ground-breaking technology, innovative tools, and top-notch training. This gives them the freedom to control their business model, financial freedom, and future.
The History of EXP Realty
Founded in 2009 by Glenn Sanford, EXP Realty’s business model was designed to be the antithesis of a traditional real estate brokerage. He eliminated the brick-and-mortar concept and introduced a generous commission structure to pay agents equally.
A New, Virtual Brokerage Concept
When EXP Realty burst onto the scene in 2009, the founder introduced a virtual office to the real estate world, referred to by EXP agents as “the cloud.” This allowed EXP Realty Agents to work anywhere on the planet.
Although considered radical by other agents, Mr. Sanford considered this to be an ideal solution to reward each EXP Realty agent for all of their hard work and genuine dedication to EXP.
Today, EXP Realty is part of the publicly-traded company EXP World Holdings on the Nasdaq stock exchange.
The EXP Name Begins To Grow
Other real estate entrepreneurs realized they were not making nearly as much money as the agents at EXP Realty and were impressed by this. The new virtual brokerage seemed exciting and enticed them to join EXP Realty and adopt the new business model for their own real estate career.
This virtual brokerage concept is the #1 reason why EXP Realty is revered as the most agent-focused real estate brokerage company in the real estate industry. But are all of the perks of this new franchise model hiding an inside secret? Is EXP Realty a pyramid scheme? Let’s find out!
Proof That EXP Realty Is NOT A Pyramid Scheme?
A pyramid scheme, by definition, is an unsustainable business model where investment returns are typically from principals of investments or membership fees instead of the underlying investment gains. It is often marketed for its appeal as a sure-fire way to turn a small amount of money into high-dollar returns.
There are two types of pyramid schemes that are most common. Naked pyramid schemes and product-based pyramid schemes. And we will finally prove the rumors to be wrong, showing in fact that EXP is NOT a pyramid scheme.
Why EXP is NOT A “Naked” Pyramid Scheme
A naked pyramid scheme is when individuals don’t sell any products. Instead, commissions are earned solely by recruiting others.
However, EXP Realty agents make money by selling houses, as they are legitimate real estate agents who earn a commission. It just so happens to be that another one of their income streams is revenue from recruiting agents to join their great and growing team.
Proof That EXP Realty is NOT A “Product Based” Pyramid Scheme
The product product-based pyramid scheme is similar to the naked pyramid scheme. However, the product-based pyramid scheme uses a product as an initial “investment,” such as a $200 start-up kit. The recruiter then receives a percentage of that start-up fee.
However, while EXP Realty Agents do pay a sign up fee to join EXP Realty, their sponsors do not receive a portion of that. The fee that new agents pay to EXP is strictly administrative fees that are necessary for setting the new agent up in the cloud, etc. Thus, discounting the rumor that EXP Realty is a pyramid scheme.
Pyramid Schemes Are Illegal, EXP Realty is Not!
Yes, pyramid schemes are illegal. However, EXP Realty is a successful and legitimate business model and in no way at all is it a pyramid scheme.
Pyramid schemes have a history of setting up shot and failing fast. Contrary to EXP Realty, which has been in business since 2009 and is growing at an astonishing rate, in part to it’s unprecedented business model.
Which is why, before classifying it as any type of scam or pyramid scheme, it is important to properly educate yourself on EXP’s thriving business model.
Multi-Level Marketing Company vs. EXP Realty
Widely considered a controversial marketing technique, MLMs focus on selling products or services where their revenue is derived from unpaid workers who are selling the products or services, and the company pays them in a pyramid-shaped commission structure.
However, unlike Multi Level Marketing companies, EXP Realty’s business model is derived from licensed real estate agents who sell homes via a cloud based brokerage and grow their business by inviting other licensed agents to join their team. Very similar to building traditional real estate brokerages, however the primary difference is that all of EXP Realty’s business is done via the cloud.
How Does EXP Realty Work?
in 2009, Glenn Sanford realized that he could close millions of dollars in deals by focusing on an untapped audience. Using online lead generation and an unprecedented real estate brokerage concept, Mr. Sanford began to see his sales skyrocket, and the success of his real estate business began.
Many agents are drawn to the income potential that EXP Realty agents are seeing. Instead of building a lucrative business using traditional real estate services, real estate agents can increase their sales and commissions by working through an online brokerage, such as EXP Realty.
EXP Realty Offers Generous Commissions & Additional Income Streams
EXP Realty agents receive generous commission splits and both stock and revenue shares. EXP Realty’s online platform is more advantageous than the traditional brick-and-mortar brokerages, allowing them to offer their agents profit-sharing. Essentially, the agents are the owners, which we will dive deeper into later.
Traditional Real Estate Brokerages
Traditionally, brick and mortar real estate companies are committed to high overhead costs, such as the cost of their building space and employee payroll. They are usually structured by four levels.
- Top of The Ladder – Corporate Level
- Middle of The Ladder – Regional Franchises
- Bottom of The Ladder – Local Offices
- Very Bottom of The Ladder – Office Managers & Other Hourly Staff
Let’s use this scenario as an example. Netflix outperformed and ultimately shut down Blockbuster. EXP Realty is doing the same thing to the traditional real estate business model that we have known for nearly a century.
When working for traditional real estate brokers, you are essentially renting a desk and making a mere 70/30 commission split.
EXP Realty’s Commission Structure
As an agent-owned cloud brokerage, EXP Realty has a competitive 80/20 commission split from day one, exceeding today’s industry standard. However, unlike traditional real estate businesses, EXP Realty has a commission cap of $16,000.
Once a real estate agent reaches $16,000 in commissions from selling real estate properties, they transfer to 100% commissions for one year until the anniversary of their start date.
This lucrative commission structure entices real estate agents to join EXP Realty, as they are almost guaranteed to make more selling real estate in their first year as an EXP agent than they would be working as a real estate agent for another real estate business.
EXP Realty Stock Options
One of the sweetest perks of being a part of the EXP world is the company stock options that EXP Realty offers. As an EXP Realty agent, you can earn EXP stock in three ways.
- When you close your first real estate transaction
- When you reach your commission cap of $16,000
- An agent you sponsor closes their first real estate transaction
You can also win awards from EXP Realty that will earn you up to $16,000 in company stock. The most common award that offers this bonus is the Icon Agent Award, provided to EXP agents who achieve specified production goals.
Lastly, EXP Realty offers an incentive called the Agent Equity Program. With this program, EXP Realty pays 5% of every transaction’s commission to you in stock at a 10% discount.
Considering how fast the EXP world is growing, it is an excellent possibility that your company stock could skyrocket in comparison to having stock with most real estate companies.
EXP Realty Revenue Sharing
Another favorite perk offered by EXP Realty is the optional revenue sharing for its investors.
EXP Realty revenue sharing is a cascading system with seven tiers. When you utilize this revenue-sharing program, you can enroll other agents that you know with EXP Realty. Then, when that agent sells a home, you will receive a portion of EXP Realty’s revenue.
However, the revenue-sharing program with EXP is optional. If you choose to forfeit this program, you can still make a pretty penny with EXP Realty’s competitive commission splits, stock options, and other resources.
EXP Realty’s Fees
As the old adage says, when something sounds too good to be true, it probably is. So we’ve heard about all of these wonderful benefits available in the EXP world. But what’s the catch?
Truthfully, there are only a few fees at EXP Realty, which are considered minimal compared to the traditional real estate business model.
According to the chart above, the highest fee at EXP Realty is the start-up fee of $149, while the least expensive is the transaction fee of just $25. Unlike other real estate businesses, there are no franchise fees, desk fees, or royalty fees at EXP Realty.
Discounting The Rumors: EXP Realty Is NOT an MLM Company or a Pyramid scheme
EXP Realty is audited by the SEC and is 100% legal, and the topic of whether or not they are an MLM company or a pyramid scheme is just a very nasty rumor that began to circulate the internet with EXP’s success.
EXP realty is a successful and legitimate franchise model. Many real estate agents in the real estate industry confuse EXP Realty with MLM’s because of their equity ownership opportunities.
However, these revenue streams are not structured nor operated like MLM’s or pyramid schemes but instead structured for prosperity, growth, and long term success.
Why Is EXP Realty Rumored To Be An MLM Company?
First and foremost, EXP Realty is a successful real estate business, not even making Wikipedia’s vast list of existing multi-level marketing companies. While EXP Realty does mirror some features of some MLMs, EXP Realty is not defined as a multi level marketing company.
EXP Realty’s style of compensation, primarily it’s profit sharing option, gives EXP Realty the negative reputation of being a multi-level marketing company. By sponsoring a new real estate agent and being compensated for it, many in the real estate industry would call EXP Realty a bonafide MLM company.
But if you do the proper research and understand the company’s structure and dynamics, you will understand that EXP Realty is not, nor ever will be, a multi level marketing company.
Why Is EXP Realty Rumored To Be A Pyramid Scheme?
Since about 2016, when EXP Realty really started to gain momentum by making a name in the real estate niche, quite the stir of rumors began within the real estate industry, and the million-dollar question arose. Is EXP Realty a pyramid scheme?
Because EXP Realty agents do not solely gain commission from recruits alone, EXP Realty cannot be defined as a naked pyramid scheme.
Nor do EXP agents receive a percentage of their sponsored agent’s sign-up fee, which is why one should not so quickly surmise that EXP Realty could be viewed as a product-based pyramid scheme, because no products are being sold by the sponsored agents. EXP Realty is simply recruiting new agents who are ready to explode their career to join the EXP Realty team.
Wrap Up
There is no question that real estate sales with EXP Realty can be a very lucrative career path. And deciding once and for all if EXP Realty is an MLM company or a pyramid scheme should not be up for debate.
Those who properly educate themselves to clearly understand EXP Realty’s viral business model will clearly see that EXP Realty does not at all mirror a pyramid scheme nor a multi level marketing company.
EXP Realty’s quick growth and unheard of business model is nothing short of legitimate success. And with success and growth, unfortunately there will be some who want to negate the concept of EXP’s thriving reputation.
Deciding If EXP Realty Is Right For You
EXP Realty is a strong brokerage, founded with your success in mind. Joining EXP Realty offers an abundance of lucrative revenue streams and the best in cutting-edge technology.
However, onboarding with EXP can also be challenging. Getting started with the online systems, understanding the tools and training, and overlooking the company of some “salesy” agents as co-workers can be a bit much when starting out.
I hope that this article has discounted the rumors that swirl about whether EXP Realty is an MLM company or pyramid scheme. And while EXP may not be for everyone, one thing remains true.
EXP Realty is growing exponentially in both the company sales and the number of agents. As gas prices continue to rise, the idea of a virtual office is becoming more appealing to many professionals, especially those in the real estate industry.
If becoming an EXP Realty agent sounds like a good fit for you, contact EXP Realty agent Traci Gagnon.
She is a highly trained, experienced EXP professional who can answer all of your questions, explain the program in further detail, and help you explode your career as a new EXP real estate agent!
