Is eXp Realty a Pyramid Scheme?
What is a Pyramid Scheme?
To answer the question of whether or not eXp Realty is a pyramid scheme or not, I think it’s necessary to define what a pyramid scheme is.
Why is it that people say this? Is eXp Realty a pyramid scheme? In this article, I’ll tell you how eXp Realty got this reputation, what it means, and whether or not
eXp Realty is a different business model - one that is internet based and does not make use of brick and mortar offices. Any real estate agent across the country can join eXp Realty and earn high commissions.
It's True.... There is no shortage of success stories and blooming eXp Realty careers
So let’s cut to the chase. eXp Realty Pyramid Scheme – fact or fiction?
In order for an organization to be a pyramid scheme it should fit the description of one:
“A form of investment (illegal in the US and elsewhere) in which each paying participant recruits two further participants, with returns being given to early participants using money contributed by later ones.”
The FBI defines pyramid schemes as “marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships.”
eXp Realty is not a pyramid scheme. It is not a MLM or network marketing company.
eXp Realty is a real estate brokerage that has injected incentives into their model that are funded from the commission split the company earns when real estate sells.
It is a fantastic value exchange that can only be accomplished by eliminating the overhead associated with brick and mortar stores - this translates into PROFIT
Unlike the traditional franchise model of other agencies, the brokers and agents at eXp Realty are not tied with franchises or regions/farming areas to buy and sell. Savings are used to share revenue and help the company grow. When an eXp Realty agent recruits another agent to the company, the revenue generated by the new agent is shared with the original for as long as both are working for the company.
It’s time to consider whether eXp Realty is a pyramid scheme and how it gained that reputation.
eXp Realty has two primary revenue streams (it has several more revenue streams altogether, but these are the two primary ones) for joining agents:
- Selling houses (what real estate agents do every day).
- Recruiting new agents to join eXp (this comes in the form of revenue/profit share)
Compared to a traditional real estate brokerage, eXp Realty has a much lower overhead.
eXp Realty sponsors (agents that sponsor other agents) do NOT make money from agents simply signing on to be a part of eXp Realty. eXp Realty actually does make money the way a brokerage is supposed to make money–by selling houses. In fact, eXp Realty sells the most real estate of any independent brokerage in the United States and operates in 21+ countries as of this writing.
If agents aren’t selling real estate, no one benefits. The brokerage does not benefit and neither does the sponsoring agent as there is no revenue to speak of. In fact, the brokerage loses money for non-producing agents that join the brokerage because of all of the time, energy and resources invested into someone that does not generate revenue for the brokerage.
eXp Realty has a tagline of Agent Owned Cloud Brokerage. This says a lot about the company and its business model. You get a lot of freedom as a real estate agent when you work with this company.
eXp Realty is all about Revenue/Profit Sharing.
So What Is Revenue Sharing?
“Revenue Sharing” is a type of remuneration offered by eXp Realty to its agents and brokers.
Revenue sharing is the distribution of revenue or the total amount of money earned through the sale of goods among stakeholders or contributors.
It is not to be confused with profit shares.
With profit shares, the money left over after costs have been deducted is shared.
One should also not confuse it with stock shares, which may be bought and sold and whose value fluctuates.
Why Businesses Offer Revenue/Profit Sharing
Companies that offer revenue share typically encourage rapid expansion while avoiding much of the expense.
The company does not have to spend nearly as much money on marketing with revenue sharing. That’s why it’s so enticing because employing workers is cheaper than it would be if it were a regular business.
FINAL THOUGHTS
eXp Realty isn’t a get-rich-quick gimmick. It is not a multi-level marketing or network marketing firm either.
eXp is a real estate agency that has incorporated incentives into its business model. The company pays these incentives by a 20% commission split on real estate sales.
It’s an incredible value exchange that can only be achieved by removing the costs associated with physical establishments.
Agent Owned Cloud Brokerage is the tagline for eXp Realty.
This reveals a lot about the business and its model. When you work for this organization as a real estate agent, you have a lot of flexibility.
There’s no need to be wary of eXp, especially if you’re a real estate agent with many connections.
Become an agent of eXp Realty today to join a growing list of brokers.
eXp Realty is a subsidiary of eXp World Holdings (EXPI), a publicly-traded corporation on the Nasdaq stock exchange. The SEC has audited eXp and found it to be legal.
Glenn Sanford launched eXp Realty in 2009, and it now employs over 81,000 real estate agents in 21 Countries (as of 19 May 2022), And it is growing eXponentially.
eXp provides a wide selection of tools and resources for real estate agents to use in their company.
eXp World, kvCORE, Workplace by Facebook, and Skyslope are among these technologies.
Agents can participate in equity ownership opportunities through eXp Realty as it is a publicly-traded corporation.
Among these many opportunities, agents can receive stock every year when they sell their first home.
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