Maybe it is the company’s sleek, 21st century branding and focus on virtual rather than physical space. Maybe it is a recent meteoric rise (from 1,000 agents in March of 2016 to 70,000 at the end of last year). Maybe it is a ubiquitous marketing and recruitment strategy, driven by internal incentives that pay agents for bringing in other agents.
Most likely, it is a combination of these things that has made eXp Realty a target of both scrutiny, imitation and questions within the industry, as real estate professionals have sought to understand a company explicitly designed to upend the “traditional brokerage.”
But what is eXp, really, behind and beyond the sharp marketing? Is the model revolutionary, and does the company’s commitment to a non-physical, multi-national brokerage sacrifice other important supports and tools for agents?
The company
Founded in 2009 by entrepreneur Glenn Sanford and going public in 2015, eXp has rejected several preconceptions of the real estate industry—most notably, the need for any sort of physical office where agents work and meet clients. eXp says “a few” brick-and-mortar locations exist, while most agents use shared offices or work from home.
John Yen Wong, an eXp associate broker in the San Francisco Bay area, tells RISMedia that while that decision appeared fraught a decade ago, it looks prescient now.
“All of a sudden, the story about not having a giant office was no longer the giant hurdle that it once was,” he says.
eXp agents, brokers, trainers and employees mostly meet in a persistent, virtual world—not a science-fiction photorealistic CGI hub, but something with the look of a videogame from the mid-2000s. Both formal and less formal interactions can happen in this space, all using relatively accessible technology—mid-range laptops or tablets, with a microphone.
While this might be enough to draw in (or turn away) some people, depending on their comfort with technology and level of independence, the first questions most agents and brokers ask when looking at a new company are likely going to be based on money.
That was the case with one former eXp agent interviewed by RISMedia, who asked that their name be withheld so they could speak candidly about their time at the company. Relatively new to the industry, they were drawn in by eXp’s very affordable $85 monthly brokerage fee ($149 due at sign up, which includes the first month).
“That’s one of the reasons why I chose eXp,” they said. “That $85 a month was really a big plus for me.”
eXp operates with an 80/20 commission split for agents with a $16,000 annual cap, though even after reaching it they continue to pay a handful of other fees to the company, starting with $250 per transaction until the agent reaches another annual cap ($5,000), after which that fee drops to $75 per transaction. Agents also pay a minimum of 25% commission to their team leader, which goes toward the team leader’s annual cap.
The former agent says they were not aware of most of the fees until they witnessed the conclusion of a transaction after joining eXp and felt disappointed seeing the final take-home check for an agent.
“That’s my bad, I guess,” they laugh.
eXp CEO Jason Gesing, in an emailed statement to RISMedia, referred to a presentation on the company’s website that includes all the specific transaction fees—thought it does not make mention of team-related splits. Prospective agents are also told “in multiple written and verbal ways” about the fees, he says.
There are no franchises at eXp—the company operates as one large, connected entity. Wong says this is another area where eXp initially took some criticism, but which later turned out to be a positive in the evolving industry.
“There was a fear at the time eXp started of being perceived as one giant company taking over everything,” he remembers. “The perception in general around anti-trust seems a little bit different today.”
Huge multinational companies and brands like Google, Amazon and Facebook have allowed consumers to just become generally more comfortable around behemoth corporations (though some of that goodwill has waned in recent years, Wong points out).
Instead of franchises, eXp currently offers three different types of team structures, with one serving smaller groups, one for larger groups and one flexible option. The company also runs a program called “ICON” for those who meet incentive goals, which offers stock bonuses and recognition for top-performing agents.
The “Traditional Team,” which the company describes as its most common format, has less than 10 agents and needs to have closed either 30+ transactions or $6 million in volume during a calendar year. Agents only must pay $8,000 to meet their cap and get to 100% commission, though they will not be eligible for the ICON Program if they do.
The “Mega ICON Team,” as its name implies, is for larger groups—ten or more, specifically. Agent’s $16,000 cap is reduced to $4,000, but the team must reach $56,000 in annual commission paid (and if they don’t, the team leader pays the difference and they become a Traditional Team for the next year). These teams must also close 175 homes or $40 million annually, and all agents must be based within 100 miles of their team leader (or have a satellite team leader with a higher cap).
Finally, a “Self-Organized Team” allows a team to join without any of these requirements or benchmarks—any commission split is fine, though there is no reduction to the $16,000 cap.
Another part of the company that has been scrutinized by outsiders, eXp’s “revenue sharing” program has sometimes been compared to multi-level marketing programs, as agents receive residual compensation for recruiting other agents to the company. Seemingly aware of this perception, Google searches for things like “eXp pyramid scheme” turn up a handful of long-form articles and blogs by eXp agents or employees explaining the details of the program and pushing back against these labels.
The way the system works is complicated and eXp has dedicated a good amount of time and energy to explain the specifics. On the most basic level, agents get a small percentage of the adjusted gross commission income (AGCI) of other agents they “sponsor” to join the company and anyone that person sponsors (and so on). They can earn larger percentages if they have enough recruits in any of these “tiers” (meaning degrees of separation from the original agent). Sponsored agents must be active—earning $5,000 or closing two transactions every six months—to be part of another agent’s downline.
In reality, the revenue sharing does not appear to be a significant proportion of most agents’ compensation. Numbers released by the brokerage show that the average payout an agent received through the program in 2020 was somewhere around $2,000, though theoretically it could be much larger.
Gesing says the company gives back 50% of annual revenue through the program, a total of $220 million in 2021.
Another eXp offering is the opportunity to be paid in company stock, bought at a 10% discount, with up to 5% of an agent’s total compensation available this way. Wong says this program, which launched right after the company went public, not only serves to keep agents involved in the company’s success but is simply a more lucrative compensation plan from the get-go based on the discount.
“You’ve already made 10% off your money,” he says.
There is no vesting period for this stock, according to Gesing (some stock disbursed through the ICON program does have a multi-year vesting period) and about a quarter of all eXp agents have opted into the program.
eXp stock has been up and down recently, rocketing almost 2,000% during the first year of the pandemic before falling precipitously over the last year.
The experience
Of course, a brokerage is more than what it pays and what perks it offers. Wong says that eliminating all physical spaces and building a virtual world will necessarily require adjustment and come with tradeoffs to some degree.
“It’s not a problem that’s unique to eXp,” he claims. “The virtual environment, I had some skepticism.”
Like any new space—virtual or physical—it takes some getting used to, but Wong says that learning the layout and simply practicing moving around in it was enough to show just how much the platform could offer.
“I found that to get an answer when I needed it, it was immediate. But I had to have the initiative to kind of find out where to go,” he says. “Same as if you were a new agent at the old traditional model.”
While Wong admits the current build of the meta-world is “cartoony,” he sees the underlying function of it as having incredible power to eliminate inefficiencies and connect people, adding that eXp has the ability and desire to upgrade its platform (the company owns the developer of “eXp World” and has plenty of cash on hand).
For the former agent, some of their struggles were at least partially attributable to the isolation of virtual space, they said. Hoping for a quick start and training on eXp’s systems, they described being essentially left to their own devices almost from day one.
“I didn’t think there was enough support for me,” they say. “My mentor, he said he was going to have enough time for us—I don’t think he thought realistically about what it was like to bring on a new agent.”
Getting even basic questions answered was hard, and the mentor became less responsive as time went on, they say. Another person who ran trainings also oversaw a huge number of agents in the region and was hard to reach as well, they add.
The virtual eXp world can accommodate 1,000 agents or more at a time for a lecture, Gesing says—though it is also used regularly for small teams.
What the former agent says they wanted, being new to the brokerage and relatively new to the industry, was to “shadow” more experienced people at the company—directly observing every single step of their process, from their presentations to their staging to how they pitched FSBOs. That just didn’t happen, they said.
Gesing says that the mentorship program has had a “great response” overall at the company. Mentors need to have a certain amount of experience at eXp and are self-selected, he explains, and are paired with agents based on MLS and location to walk them through their first three transactions.
“The mentor’s objective is to provide guidance in a practical, hands-on way and to lead new eXp agents through each step of the process,” Gesing says. “It provides valuable one-on-one learning opportunities to further ensure our agents’ success.”
RISMedia was recently taken on a guided tour of eXp World (a shared Zoom screen of an eXp employee exploring the virtual world). Though it was hard to determine performance in this format, the world offered some incredibly granular options for customization, from accessing internet browsers on virtual workstations within the virtual world, to setting up sound-proof chat rooms in offices that could project video footage on walls.
eXp Senior Marketing Director Jennifer Van Burkleo, who led the tour, says that new agents have their names highlighted in a certain color so others can help them out when they first join. They are also dropped off right near an info desk (staffed 24/7) and a map.
Most virtual rooms seemed like they were accessed through a series of drop-down menus—teleporting user’s avatars instantly—though other spaces could be accessed just by walking. Interviews for staff positions are conducted in the virtual world, Van Burkleo says, and the software receives regular updates—recently giving avatars a passive blinking animation.
Right now, the main eXp World requires downloaded software—that is, the program must be installed on a specific device rather than accessed anywhere through a browser or app. But a beta version of the world that can accommodate 200 people at a time is already available through any web browser, allowing smaller groups of agents or staff to use the space for their own purposes (separate from the persistent, main world).
For the former agent, their first experiences in eXp World felt odd, clunky and off-putting, with technical issues on one device tablet while not running at all on another. The former agent compares the program to “The Sims,” a popular open-world video game series where players follow simulated people through their daily lives. Training within the virtual world felt like a big online college lecture, with little interaction or energy.
“It took a while to find out specific destinations,” they say. “It wasn’t personal.”
Wong says he believes there are ways that eXp can better help agents understand the model, and understand the functions of the company—both the specifics of the virtual world and the reasoning behind why it operates the way it does. With 40 years of experience in the real estate industry, he knows that he has a different perspective, having spent decades consulting with various companies on how to structure a real estate business.
“That’s me—you’re going to find that the majority of real estate agents in the world don’t get as granular as me; that’s just my nature. But what I am doing is helping the people on my team and others,” he says.
The big picture
According to Wong, eXp has created a structure that fulfilled many of the important innovations he explored when consulting with and studying real estate businesses, specifically concerning compensation structures and expenses. Physical space in particular has been “a giant burden” for decades, he claims.
“You have nice offices—it’s wonderful for getting somebody to come to your company but once they’re in, they’re rarely there,” he explains. “So it was an expense that was okay when the market was strong, but when the market turned, it was a burden that was killing companies.”
For the former eXp agent, the most important thing was the smaller support structures that they felt were lacking from the get-go—a friendly face to interact with and a clear path to learning and success within the company.
“Training is so important, there’s such a learning curve in real estate,” they say. “There’s so much to it…all these steps, and not just for their sake as an agent, but for their buyers and sellers—they should be trained really, really well.”
Despite the less than stellar experience, the agent says they aren’t ruling out eXp in the future or cautioning others to avoid the company, only urging other agents to research other companies and make sure it is a good fit before signing on.
“I would definitely tell them to be careful,” they say. “Just as a newer agent, they should be cautious.”
Wong claims he spent two years researching eXp before he “made the jump,” when he was assured that the model was sound. He also lauds the revenue and stock sharing programs as thoughtful and an improvement of other companies that have tried profit-sharing incentives.
“The way eXp does it, it’s pure. A dollar of GCI comes in, you get a percentage of that,” he says.
As someone who is later in his career, Wong also points to the ability for brokers and agents to continue receiving their revenue share income after retirement and pass it on to family following their death or if they become disabled.
He says that broadly, people understanding these benefits and opportunities is a great way to build a team and bring more real estate professionals together, particularly those who have the same sorts of goals and perspective on the industry.
“Does everyone at eXp understand it to this level? No. I tend to be geeky,” he laughs. “But if I can see this and I can message it properly, then I can say this is the place to be.”
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas, jwilliams@rismedia.com.
