Deep dive into digital brokerages: eXp Realty

EXP realty

 

jim gray headshotWritten by: Jim Gray, a professional real estate agent and a professional real estate agent coach for more than two decades.

In the last 11 months, I’ve spoken to 537 agents. Topics of those conversations were mostly strategy sessions on how to grow a business.

These agents cover a pretty wide territory of everyone from stone cold beginners, to people who are running small teams, doing almost a hundred units a year. Most of these agents were considering making a switch to a digital brokerage and the topics of conversation revolved around what a digital environment serves that particular agent’s ambitions for the way they want to grow their business.

I will address the three main digital brokerages that we have to choose from right now. The first is eXp Realty, and it is the biggest of the three, so this article will be a breakdown of all things eXp. I happen to have my license hung there. So I’m fairly familiar with this brokerage and I wanted to give you a 20,000 foot fly by of the main features and benefits of this brokerage.

When considering any digital brokerage, or any brokerage in general really, there are five elements that you want to be very clear on. 

  1. Comp plan: You really want to make sure that the comp plan serves whatever your personal growth plans are. 
  2. Business tools: You want to know what business tools you get, how they’re put together, what you have to do, and what they cost. 
  3. Training: You want to see what the training is. What’s the breadth of the training? Who does the training, and how do you consume the training? That is very important. 
  4. Agent support: When it comes to digital brokers, this is a very hot topic of conversation. If there is no brick and mortar, how does an agent get the kinds of support that they need to conduct their business? It’s an important question. I’m going to touch on that here for eXp.
  5. The company in general: What is the general perception in the marketplace of this particular company?

So again, you can go much deeper on each of these points, but my hope is that at the end of this article you’ll have a good working understanding of how eXp works, operates as a digital brokerage, and whether that might make it an option for you.

 

Comp Plancalculating money

So let’s talk about the comp plan, it’s pretty straight forward. It’s an 80/20 split. With a $16,000 cap. So, the minute you contribute $16,000 to the company, your commission goes to 100%. Now there are also transaction fees along the way.

There is a $25 broker review fee. So, for each transaction that you turn in, you’ll be charged 25 bucks for a broker review. Second is the risk management fee. This is essentially E&O insurance. For every transaction you turn in, you’ll be charged a $40 transaction risk management fee, that fee caps at $500.

When you do 12 transactions in a single year, that transaction fee will disappear after you cap and your commissions go to 100%. You will be assessed at $250 post cap transaction fee. You should know that once you hit $5,000 in post cap transaction fees, and that’s about 20 transactions, that fee will reduce to $75 per transaction.

Finally, there is a flat monthly fee of $85 that is owed each and every month, whether or not you have a closing, that is what is called the cloud brokerage fee. That fee generally covers the CRM, which is supplied to you, a full tech stack of websites, which is supplied to you. The fee also covers your SkySlope, which is a transactional management platform which is also supplied to you. That fee also covers the full breadth of training. 

Here’s the thing about fees, people get really wound around the axle over fees. I’m not saying they’re not important, but what I want to stress is whenever you’re considering fees, you really have to think of the fee in the context of your total production, right?

So you can be at a 100% brokerage, but if you don’t do any transactions, a hundred percent of nothing is nothing, right? Or you can be on a 50/50 split, but if you’re making $150,000 a year net, that is probably better if you had to pick, right? 

Let’s run a scenario. We’re going to make a couple of assumptions here. Let’s say the average home sale in your area is around $250,000. Let’s say that your average commission is around 3%. Okay, if you sold 18 houses and your average gross commission is $7,500. What that means is 18 times 7,500 is $135,000. 

If you had 18 deals which you did over 12 months, you grossed $135,000. With eXp, it’s an 80/20 split with a $16,000 cap in this scenario you kept.

money and calculator imageSo there’s the $16,000 that you paid to eXp, you also paid $25 per transaction for the broker to review it. You then paid $40 per transaction for your insurance. Now, what you’ll come to realize is that it is eventually capped out at $500. If you were to have been charged $40 for all the transactions, you would have been charged $720, but the company at eXp caps you at $500.

Are you with me now in this scenario? You had seven extra transactions after you capped. 

You gross $135,000. You contributed $16,000 to eXp on the split, you paid $450 for transaction fees. You paid $500 for your risk management fee, you paid $1,800 in your post cap transaction, and then you paid $85 a month for your monthly cloud brokerage fee. So if you were to add up all these fees they would come to $19,811. 

So you grossed $135k, you paid out $19,000 and change and you netted $117,000 or the brokerage costs you 13%, right? So in this case, you get to keep 87 cents off every dollar. This is where I tell agents don’t necessarily be afraid of fees.counting money

I mean, it costs money to do business, right? The key is looking at the fees in context of your entire production scenario. 

The brokerage only costs you 13%, you’re keeping 87%. Now let’s say though, you get two deals a month, which is 24. This is where you’re going to see the power of the cap. You now gross $180k, you net out about $162,000, and now you’re keeping 90%. As your production rises, your costs go down. So whether or not you’re at a digital brokerage or a traditional brokerage, I would just simply say that a capping model is typically the best, the most advantageous for an agent.

At eXp they do have a cabin model. I’ll leave you with this just for fun. Let’s say you do 36 transactions, that’s three a month. Anybody can do that. I did 57, my first year.

Okay, let’s say you did 36. You grossed out at $270,000. With all of eXp’s fees, that costs you about $24,000. You still net it out about $252k, and you got to keep 93 cents of every dollar that you put in. Pretty sweet, right?

The model gives you something to strive for. So this is the scenario of eXp with all the fees and it’s a pretty strong comp plan when you take it all together. 

 

Rev Share 

coins stackedI’m going to guess if you’re reading this article, it is likely your plan to be practicing real estate for the next 10, 15 or 20 years. That’s a long time, and in that time you are going to be interacting with lots and lots of real estate agents.

There’s something you should know. If you ever became a real estate broker, if you ever owned your own brokerage, the most valuable thing to you as a broker is good producing real estate agents. A good real estate agent that produces for a broker over time can be worth hundreds of thousands of dollars.

So I want you to think about something. If you’re out there being a great agent, chatting with agents and they ask you what you think of eXp or any agency that has a rev share program and you say you like your brokerage. It would be in their best interest to check it out. What if they checked it out and joined, you just gave a very valuable gift to your broker.

I would suggest to you that the way a broker should say thank you is to give you a share of whatever that agent produces. It’s not that you have to be all about recruiting or that’s all you think about, but what  I want to impress on you is that every time you do a transaction, there’ll be an agent on the other side of that deal.

It’s likely from time to time, you’re going to be talking to agents. They’re going to ask you what you think of your broker. You’re going to tell them they’re going to join, and why shouldn’t you get a little piece of that production by the way of the agent you bring on, so on and so on. 

One of the benefits of any digital brokerage is because that brokerage has no brick and mortar to pay for, they have a far thicker profit margin to play with. A smart digital brokerage is taking that and redistributing it back to the agents that help the broker build the company, and that’s the case with eXp.

eXp also has a multilevel compensation plan for agents who invite agents to join the company. It goes seven levels deep, and it depends on where an agent would fall in your network. That would dictate what you would get paid. stock market graphs on computers in office

Just to give you an idea, let’s look at any agent that you sponsored in. Anything that they produced, you would get 3.5%. So just as an idea, as an example, if you took the $16,000, that would mean that agent produced $80,000 in GCI for the company. 

$80,000 times .035 is $2,800, so you can earn up to $2,800 for every agent that’s on your level one. If you invited five agents that joined the company and they all added 2,800 bucks, that’s $14,000, right? You could earn $14,000 each year that those agents kept for as long as they stayed at the company.

Then if those agents introduced other agents that joined the company on your level two, you could get paid 3.8% of your level two agents up to $3,000, and so on. The thing to know here is you can get paid down to seven levels deep.

So an agent that you invite, then invites someone, that person then invites someone and so on, down to seven levels. You could potentially get paid on all of that. 

laptop and calculatoreXp has sort of designed it like an hourglass, if you notice the bigger percentages towards the top, it gets skinny in the middle,  and then it widens out at the bottom again. This model is built for agents, so that if they were to stay a long time, the largest part of your downline will grow at levels five, six, and seven. You’ll put a number of people in at the top, then those people will invite people to do whatever they’ll do, but over time, your network can grow quite large.

eXp wanted to incentivize people to stay around, to give you time for your network to grow. Doesn’t it make sense to make money today on your buy and sell commissions, but then as you go and introduce agents, they come in and they produce too?  Over time your network grows and your rev share monthly checks grow incrementally larger and larger. 

Over time, the theory is your rev share could potentially rival or exceed your commissions. And at that blessed moment, you can retire. So the thing to think about is, would you like to retire and does this sort of approach make sense for you? 

Here’s the other thing, if you’re at a brokerage where you don’t have this possibility, and while you might like the broker, the question is: Is it the best thing for you given the likelihood that at some point in the future, you may want to have the choice to not have to go on listing appointments with buyers. 

Overall, you have to consider buy and sell commissions, rev share, and then finally the fact that eXp is a publicly traded company so there is a very robust stock award program.

 

Stock Program stocks fluctuating on computer screen

When you get your first close, every year, you’re awarded stock. Every time you sponsor an agent, you’re awarded stock. Every time you hit your cap, you’re awarded stock. If you become an icon agent and you were to do 20 transactions, roughly past your cap, you will get awarded $16,000 in stock. At eXp, if you want to opt into this program, they’ll take 5% of your pre-tax commission and they will sell you stock at a 10% discount.

The idea here again is agents live today on buy and sell commissions. This is why it’s an 80/20 split with a $16,000 cap, it rewards agents for production. You make money, you keep more money. With each transaction as you go along, you can get to a 100% quicker with a low cap. That’s number one.

pointing to stocks on a whiteboardYou also get a longer term play for cashflow. As agents join the company based on your recommendation, you can accrue equity and stock awards in the company as you go along. So I want you to think about that over 10 years.

In the digital brokerage space, these revenue opportunities exist that did not exist prior. It is definitely something to consider at eXp and in other digital brokerages as well. You get your buy and sell commissions, you have the possibility of rideshare, and you have stock awards. I would consider this a fairly robust compensation plan.

Now, if you just want your buy and sell commissions, and don’t really care about rev share and stock awards, that’s fine. The 80/20 split with a $16,000 cap, you’re still going to make a lot of money just doing those buy and sell commissions.

However, if you have this idea that you like to talk to agents and you want to start creating passive residual income, then you have that opportunity through rev share and then possibly equity ownership through the stock program. 

 

Business Tools

Let’s talk about business tools in 2021. It is so important to have the right tech stack in place to be competitive.

So the first thing that you get with eXp is two really important pieces of equipment:

  1. A fully IDX enabled website where people will be able to search for properties, create saved searches, get listing alerts, etc. It can be custom branded to you, and it sits on top of kvCore. 

adult-architect-blueprint-businesskvCORE is the CRM that eXp furnishes to all of its real estate agents. CRM simply stands for Customer Relationship Management software. Whatever brokerage you happen to be at, the thing I would say is an agent without a CRM is like a carpenter without a hammer. You can’t really do your job without a CRM, and you certainly can’t build a business. 

kvCORE is a very robust CRM with some very important features. For example, you can put all of your customer’s information in there. You can see when they were on the website, you can see what they were looking at, you’re able to keep all of their data. This means you can send them reports in an automated fashion. You can also communicate with them via text, email video messages, whatever you want. You can even create automated campaigns that have multiple touches, such as a text then an email, then a phone call then a voice message. 

What this does is it automates the touches so that you can stay in contact with a far larger group of people over time. 

woman studyingkvCORE through eXp makes it easy to generate leads, so you can simply click a button and run a Google pay-per-click campaign. Or you can click a button and run a Facebook marketing campaign. You can click a button and run any social media marketing campaign for listings through the kvCORE property boost. You simply just click the button, and put some budget on it and what happens is the seller loves you because they see the listing going through the Facebook feed. You’ll sell that listing even quicker and for more money because you’re just going to get a lot more eyeballs on it. 

Another advantage, which is the most beautiful thing, is you’re going to get a lot of people giving you their contact information because they want more information on that listing or they’re going to request future showings. What’s great about that is you’re not going to sell them that listing. You’re going to sell them something else. That’s how you can turn one transaction into two transactions. What I do like about kvCORE is it makes it fairly simple to do all of that and very inexpensively. 

real estate agent taking call from a clientYou can get these websites on your own that eXp uses through kvCORE, it’ll cost you about $1,500  to set up and anywhere from $200-$300 a month to keep up with. However, this is included with eXp’s cloud brokerage fee which is only $85 a month. it’s a pretty good value, and it’s fairly important.

  1. You also get SkySlope. Because this is a digital broker, it’s not like you’re going to take a contract and walk it into an office to hand to the nice lady at the desk. Instead, you get to do something better, which is why you need a transactional management platform. IWith eXP, that platform is SkySlope. 

You put the contract right onto SkySlope, and once it’s there then your broker reviews it and accounting can see it. Then it’s just a click of a button from there. So it actually makes it really easy to manage purchase offers and closings.

  1. You’ll also have access to eXp World. Again, in a digital brokerage, one of the keys is having all of the day to day stuff right at your fingertips. 

What I can tell you is eXp builds out its own back office for each individual agent, which actually is quite convenient. So you can do almost everything on the back end. That’s where you can get your SkySlope, you can do your in-house lead gen too. Plus, as you have closings and earn stock, you can track the value of your stock portfolio, which is kind of exciting.

eXp World handles the whole marketing center, so you can grab all the logos and signage templates from there. You can go right into the marketing center and there are literally thousands and thousands of templates for flyers, door hangers, listing presentations, slide decks, you name it, it’s all there. Plus, it’s all customizable. 

What’s nice about the way it is set up is it’s all accessible from one single website. You can also access your dashboard or workplace which is where you’re going to be communicating with various departments. Whether it’s your eXp broker, or the stock department. In other words, you’ll be able to go in and you’ll be able to go in and see, your commissions, what you’ve earned from your stock, etc. You’ll also be able to see the progress of your closings, and all of that brokerage admin stuff. So, this is really, really helpful.

 

Training

Here’s something I have discovered as a real estate agent, coach, and somebody who’s very experienced with the way brokers operate. A broker really should feel proud and excited of it’s training.

When you look at a training calendar, it really ought to tell you what this company actually thinks about training and what it really thinks about its agents. I would say reading it is how you can read the tea leaves of a brokerage or a broker. For example,  if a brokerage has no training calendar, that’s not bad or wrong by the way, but it tells you something about the brokerage, right? It just helps you make your decision. list of calendar events for one day

At eXp, you can go to the Cloud, and it will take you right to the eXp calendar. The thing I want to explain to you, is that you can see just how robust the list of training sessions is. They offer training classes on anything from scripting, to how to sell a hundred properties a year using YouTube SkySlope. There are classes listed for basic training, attracting agents through your mission statement, goal setting for agents, farming on a budget, real estate fundamentals, advanced training real estate business planning, and so many others topics. There are dozens each and every day, so it’s easy to hop on and see what makes the most sense for you. 

So you can go live into eXp World, which is a true digital environment that you go in as an avatar. Another really convenient thing is that many of these classes are recorded, so if you the actual live class, you can get the replay. If you miss the class and you don’t want to watch the replay, most of the classes are in a very regular rotation as well. So, it’s not like you’ll never get another chance to take it. If you miss it this week, it’s likely going to come back next week or the week after. 

fast start

Here’s something else that’s interesting to note about eXp, these are essentially national level training sessions. You will have access to dozens, even hundreds of these classes from all over the country, and you can rest assured that the person in the front of the room teaching the class is a nationally recognized content expert on that exact subject matter. What this really does is it gives the agent access to more training, gives them more ways to consume the training and the training level is top notch. If you are a new agent, this is kind of important. 

Mentor Program

At eXp there is a mentor program, so you’ll be assigned a mentor. This is an expert real estate agent that lives and practices right in your geographic area. Their job is to hold your hand through your first three transactions. So they’re going to be doing things like allowing you to shadow them on appointments, helping you understand the contracts to use, showing you how to negotiate, how to understand your market, how to use your MLS, and they will give you a lot of one-on-one coaching.

They’re that go-to person for you. That’s really going to help you get your real estate career kicked off just on the fundamentals. In addition to that, you’re going to gain access to the eXp Mentor University. This is really important, because this is a 10 track learning course that hits the fundamentals of how to be a real estate agent. It will cover things like how to work with buyers and sellers, how to use kvCORE. It also touches on how you use SkySlope, how to navigate eXp World, setting up a real estate business, how to run marketing campaigns and so on. So, the idea is if you’re a new agent, not only do you have your mentor assigned on day one, but your websites and your CRM are all active and you have access to the general training, which includes almost 80 hours every single week.

With a digital brokerage, if it’s designed right and well executed, it ought to furnish a lot of training. I would say generally, eXp does tick the box there. 

 

Agent Support

Let’s talk about agent support. Now this is a big one, right? Because there is no office to go to. It’s not like you’re going to drive to the office and I’m going to talk to Sally who sits at the front desk and I’m going to go and find Fred who works in the accounting office. It doesn’t really work that way in this new post COVID age. We do it all digitally, but there’s some really big advantages to that. 

At eXp, the way that they’ve configured it there are two main platforms that allow agents to interact with other agents and all brokerage staff in a fairly low friction sort of way.

 

eXp World pexels-rodnae-productions-8293694

In this amazing day and age, this is the virtual campus of eXp and all of the broker’s services are all contained within it. 

In this campus, everybody that you need to talk to, everybody that you need help from with a question, you are going to find them here. So if you want to talk to your broker, you would go to the broker state rooms in eXp World. So this is where you would take a number, you would fill out a form, and then in one of these rooms that you see here along the side, you would meet with your broker virtually.

It’s very, very simple. So, now let’s say you have an accounting question. Maybe something is up with your commission or paycheck, you can go right to accounting support. You will just navigate your online avatar to the accounting department on the virtual campus. Basically, you’ll just take a number, and just hang out there until they can answer your question. In my experience, I’ve rarely waited for more than six or seven minutes.

house for saleThere is really an option for just about anything on eXp World. For example, sometimes as agents, we have questions and we’re not sure who to talk to, so you can go right to the agent solution center. There are usually several agents that are sitting there and they’re here to answer questions, or you can just chat with them.

eXp World also has an awesome addition called Tech Outpost. What is really neat about the Tech Outpost is it’s real time tech support. I go there, take a number, and get in line. I’ve had these tech guys remote into my computer and fix it in just a matter of minutes while I was sitting there.

What is interesting about eXp World is it really begins to feel like in-person meetings with agents. You don’t have to text them or send a direct message to them and wait for them to get back to you. You can physically go into this digital world, take a number and then meet face to face with folks in these various departments. It is really cool.

 

WorkPlacedrone neighborhood

You will probably recognize the format immediately. It looks a lot like a social media platform. WorkPlace is actually a Facebook product that a lot of companies now use. 

Most of the digital brokerages are going to use WorkPlace, and the thing I want you to know is that this is where you’re going to interact with agents, brokers, and all the support staff. At eXp there’s over 50,000 people who show up to work every single day in all of these various departments.

So, as an example, with all of the agents in New York, I can send direct messages to my broker. I can call her through video chat, a direct message, text message, or a straight up phone call. Whenever you have taking notes during classquestions, what’s very interesting. You can also post any kind of question and people will respond many times with different answers. Say I’ve been looking for documents, I’ll post, ‘Hey, do you know where this disclosure is?’ And five people will respond with directions on where to go, or they’ll even send me a link, which is really kind of neat.

In most cases with other digital brokerages they have things like zoom calls, texting, and phone calls, or email. It’s not bad, but with eXp, I’ve found it to be far more robust, especially with the presence of eXp World. So this is how in a digital environment, you can stay far more connected.

In my experience, once you get really good at this (and you will pick it up quickly)  the answers that you’ve always been looking for as an agent, you get them really fast and speedy.

 

Company Overall outside of house

eXp is obviously publicly traded on the NASDAQ right now. It has 50,000 agents and it’s in 13 countries. One of the challenges with digital brokerages right now is there’s not a lot of identity for them in your market. Of the three main digital brokerages, eXp right now is the largest and has the most widely recognized brand identity among the three. I would say that right now, brand identity is helpful when you’re trying to win a listing or attract the buyer. Not to mention, in the rev share possibilities of eXp. Imagine, if you know people in Canada or Mexico, or various other countries, the possibilities for growing your downline become quite large.

To get a sense of the size of eXp Realty, when it comes to independent brokerages, of the 500 largest in the US for closed transactions in 2020, you can see that eXp is number three. Soonly Realogy and Home Services of America are larger.

I point this out because we all know what happened in 2020, we had the COVID lockdown. What was interesting about digital brokerages, and eXp in particular, is the agents. We saw a lot of agents realize that they had to conduct business untethered to a physical brokerage office location.

business meetingThis is one of the drivers for eXp, which is really interesting. This is a good indicator that even though many brokers are still fairly traditional, eXp Realty is still competitive in terms of growth. It has the most steep growth trajectory and it’s digital, so it kind of gives you an indication of where I think this industry is going to go.

The other interesting thing about eXp, is that you have healthcare through Clearwater Healthcare and benefits, a very robust healthcare benefits provider. So if you don’t have health care they’re going to provide really good options for you. 

There’s also something called Express Offers. eXp essentially has investors in most states of the United States, so you can sit in front of a seller and have the ability to entice them by letting them know that you can bring them a cash offer. This gives eXp agents a greater ability to compete with the buyer. So eXp has created a digital brokerage model where you have a nice capping model, you can have rev share, you have the option to earn stock, but then you also have the ability to go out and make cash offers to attract sellers, which is kind of cool.getting a real estate license

I’ll leave you with this, just because eXp is digital first, it doesn’t mean they’re digital only if you want office space. All eXp agents have a membership to Regus spaces, so if you were to go to regus.com and put in your zip code or the town you work in, you will get a list of all of the office space that you have access to for free. Every real estate agent at eXp can walk right into a Regus and use any of the space there. There’s a full-time receptionist on duty, there are refreshments, there are conference rooms that you can use. In addition to that, there are full copy, fax, and scanning services. 

So, if you’re the kind of agent that does need an office, the offices do exist. Or if you just want to meet clients in a professional space then Regus is the way to do that. In a nutshell, eXp does actually give you an option to be in an office. 

That is the fly by on eXp. We went over the compensation plan, the business tools, training, agent support, and company benefits overall. .

Based on these five components, it is a viable option. If you’re thinking that a digital company might be the right approach for you, I hope you found this helpful.