As real estate markets in much of the U.S. are contracting, many real estate companies are making cost-saving changes. Most of the time, that means higher fees or fewer services for agents. Many times it means staff layoffs, which translate to fewer services for agents.
At a time when most companies are cutting and slashing and tightening their belts, eXp Realty has just made a generous change to the revenue sharing calculation. On June 30th, eXp announced that for the first time, it is refining revenue share criteria for its agents.
Revenue Share Explained
If you are not familiar with eXp Revenue Share, I’ve written about it in other posts,
In short, agents who help grow the company are paid ‘referral fees’ from eXp Realty, according to a schedule of percentages which increase as agents sponsor more partners into the company. with the addition of five sponsored agents, a bonus level is opened up (eXponential Share). Each five agents opens another level. Here is a chart that explains it:
So if I have five active agents that I have sponsored, I get paid 3.8% on the next tier instead of .2%. Remember, that comes from the company’s split with the agent, not from the agent. If I sponsor 10 active agents into the company, I receive 3.5% on the first tier, 3.8% on the second tier, and 2.4% on the third tier. And so on.
eXp is not a franchise, it is one company. One international company. That means you can sponsor agents into eXp from any of (currently) 24 countries where eXp operates. That is, of course, true for anyone in your revenue share group…anyone on your seven levels.
What Has Changed About the Revenue Share Criteria?
Previously, agents had to have 40 active agents on their first tier, (that they have personally sponsored and are actively selling real estate) to get the bonus of 4.5% on the 7th tier. That has been reduced to 30. This is the highest eXponential Share bonus of all the tiers…from 1/2 % to 4.5 %.
What that means is…if we personally sponsor 30 active agents (called FLQA – Frontline Qualifying Agent) then the company pays me a referral for all seven levels of agents in my revenue share group…at the highest percentages.
All agents are on an 80/20 split with the company, until they reach the cap of $16,000 paid into the company (roughly $80,000 in sales), then they are at 100% less fees, and those cap as well. eXp Realty pays Revenue Share from the company’s commission split, the 20%.
Once the agent’s cap resets on their anniversary with the company, Revenue Share starts back up all over again.
“At a time when other companies are increasing their rev share thresholds or imposing new fees, eXp Realty is the only brokerage lowering revenue share criteria for agents, fueling exponential opportunities for them to build their legacies,” said Glenn Sanford, founder and CEO of eXp Realty. “Revenue share is an important income opportunity for agents, so this change is a testament to the singular agent-centric focus we were built on. We believe in our aligned compensation model, which was created to reward agents for both production and contributions to eXp Realty’s growth.”
Why is Revenue Share Important?
Multiple Streams of Income
Revenue share is one part of eXp Realty’s aligned compensation model, which also includes competitive commissions and stock equity programs designed to enable its agents to build for their future.
Revenue Share is one of the (several) ways that eXp Realty agents can earn income. The first, of course is from helping buyers and sellers purchase real estate. The low 80/20 company split is attractive…one of the lowest splits in the industry. Add to that any of our strategic partner affiliations, and stock awards, and you have several streams of income.
Those in the real estate industry know that there are ups and downs. Some months you may not even have income. Revenue Share helps to cover those lean months with income. It also makes the good months even better!
Revenue Share is An eXcellent Exit Strategy
Most agents have to work for decades at a high level to save enough income to also invest enough to create a healthy retirement. That, as in any industry falls under the ‘Pareto Principle’ … the 80/20 rule. 80% of the business is done by 20% of the agents. Let’s be honest, most don’t save enough for retirement.
eXp Realty Revenue Share adds a level of income that gets agents off the proverbial hamster wheel. Even when agents stop selling real estate, they can continue to earn income from the Revenue Share program. They just need to keep an active real estate license at eXp. There is no vesting requirement. There is no requirement to sell.
A Realistic Comparison for A Retirement Plan
Now let’s put this into perspective for those who are currently investing or looking to create a retirement plan.
In 1994, financial advisor William Bengen published a paper —Determining Withdrawal Rates Using Historical Data. Bengen found that retirees could safely spend about 4% of their retirement savings per year, with adjustments for inflation over the years.
If we use that number and relate it to how much annual income is produced through Revenue Share, it’s easy to see how powerful even attracting just a few agents can be long term.
Suppose you attract ten agents after 5 years and earn $175,000 annually in residual income through Revenue Share. To provide the same income level in retirement, you’d need $4,375,000 withdrawn at 4% annually.
Question for you, which is more difficult, attracting 2 agents a year and helping those agents duplicate your results; OR; save up over 4 million dollars. Even if you could save for 20 years, you would need to save over $200,000 per year (after taxes and living expenses).
Revenue Share is commission income. Agents are paid a small referral from eXp’s company dollar. It’s like getting hundreds or even thousands of small referral checks from the company, based on the size and activity of your revenue share group.
In many ways, agents at eXp Realty make more money for doing the same things they do at any other brokerage. eXp Realty Revenue Share is a unique opportunity to build an additional income stream while continuing to do what you are already doing, selling real estate.
Contact Chris Highland, 301-401-5119, for an honest conversation about our 8 years of experience at eXp Realty, the best business decision we’ve ever made!