Saturday, March 31, 2007
I still can't believe how many people are getting scammed by these people from Canada. Steve Morris. If you have watched the pitch video and still joined them, I don't know what to say. Maybe there is a bridge in brooklyn i can sell you.
The formula is simple, you pay them $300 every year no matter what you do. that $300 is gone. Then you are encouraged to buy business cards, stationery, training DVD's, training camps, rallies, that's all going to end up to $1000 or more just your first year of doing real estate with these people. Have you made any money? probably not. It's a cult. Like Amyway or World financial group.
Listen, it's simple, any job where you are hired but you have to pay them first, is a scam. No legitimate business requires you to pay them anything. Even working at mcdonalds you don't have to pay upfront.
And the problem is , can you sue them? Good luck, they are in canada.
Those are numbers I'VE never heard...
Here is what I got from their corporate sites:
Open Offices : 5,400+
Active Agents : 130,000 +-
Open Offices : 3,700
Active Agents : 120,000
Open Offices : 6,600
Active Agents : 110,000
Open Offices : 547
Active Agents : 58,810
ERA: - (Oddly low ratio of agents/office)
Open Offices : 2,800
Active Agents : 36,000
Franchises Sold: 800 ** They didn't mention number of open offices
Active Agents : 21,400
Speed of growth means little. I've seen new franchises pop-up and then drop. In order for this to be a true comparison, we'd need to see how many of these were new offices, how many ditched one frachise for a new one, how long they've kept them and how big their market share is.
And the comments about top agents joining ______ from RE/MAX means little. Especially since they are one of the largest companies out there. The agents I know that make more than a million a year in commissions are with RE/MAX. And haven't left and have no plans to...
And my comments about Exit stand. Not only is it the silliest franchise name I've ever heard (and you should hear what some consumers have said - LOL - they aren't nearly as nice) but because all agents are only being pitched the "residuals" concept they are getting most agents who are recruiting and not making sales.
Their whole pitch is "think residuals". How is this NOT like a pyramid or MLM?? In order to make money, SOMEONE has to make a sale. And this means if you want residuals you need to find other agent who are capable of making sales for you.
Though it is a trend I am seeing more often. RealtyWorld now has one (though I hardly see any RealtyWorld offices around).
Multi Level Marketing
|Submitted: 11/20/2004 3:29:10 PM|
Modified: 11/20/2004 3:29:00 PM
|Exit Realty ripoff There is a new real estate company now that has a MLM flavor to it. Hinesville Georgia|
Hinesville Georgia 31313
There is a new real estate company now that has a MLM flavor to it. Let me tell you - it tastes like bitter herb. I am a licensed agent and I tried to place my license with this firm and they did a bait n switch with me.
I have already notified the state of georgia consumer affairs AND I will be notifying the real estate commission, BUT I do want to warn consumers to beware and be aware. Don't use them - they prey on investors - be careful.
Oh and they won't give me a copy of my credit card receipt OR tell me where they sent the information.!!!
EXIT Realty Corp. International adopted the same method of recruiting done in the Insurance industry. The key to profits is sign up fees from new recruits. While traversing on the borderline of legality, CEO Steve Morris denies that Exit is a pyramid scheme. Morris states that because only one level of residuals are paid out, no laws have been broken in the US.
Exit Realty generates the bulk of its profits from new recruits' sign up fees. These fees can range from $200 to $400. http://www.joinrealexit.com/FeesyouShouldExpect. Once a recruit is signed on, he may run into additional fees in things ranging from stationary to seminar costs.
According to various trade journals such as Realty Times, the first year failure rate is over 86%, and for those brokers or agents who have survived, over 70% have an income less than $30,000 (see Real estate broker). With these figures, the annual membership fee of $295 plus training course fees of $320 or more becomes the main source of revenue for Exit Realty Corp.
Exit proclaims that an agent can make more than 100% but that is done with erroneous basic elementary school mathematics. The formula proclaims that by making 10% off each of your recruits, you will earn more than 100% because each recruit generates 10% of their income for you. 10% from 11 recruits, according to the formula, would translate to a profit of 110% for the recruiter. If one follows the same argument, going to a store to purchase 10 boxes of cereal and paying 7% tax on each box, would incur a total of 70% tax. This, of course, defies any branch of mathematics.
EXIT was founded by CEO Steve Morris in 1996. It has grown in only 10 years to over 1,100 offices and more than 32,000 real estate professionals in North America. That makes it the fastest growing real estate franchise ever.
The growth of EXIT REALTY and EXIT REALTY PROPERTIES is substantially credited to the effectiveness and quality of its training programs. The mandate of the EXIT Realty system is to give their agents every opportunity to get the most and best out of themselves and others. Excellent teaching, training and coaching is a prerequisite for ALL of their agents and this means that they can better serve their clients.
EXIT Realty has a one of a kind sponsoring program that allows real estate agents to produce new sources of residual income. EXIT is adding 200+ agents/week in North America. It has paid out over $100 million in sponsoring bonuses since 2000. It won the Champions of Industry Award, a Pat Summerall production, http://www.bizjournals.com/dallas/stories/2004/11/15/daily58.html, for 2004 as seen on CNN Headline News.
This information is a summary of information from EXIT Realty marketing sources. See www.exitrealty.com for more information.
1. EXIT Annual Dues. $295.00
2. Regular training program fees. First program is FAStTRAC at a cost of $320.00.
3. Errors and Omission: E&O $18.00. Each transaction incurs a $18 Error and Omission fee.
4. Realtor Fees. These fees are incurred by all agents and are paid directly to your local Board of REALTORS. Please inquire with the Broker in Charge.
5. Transaction fee of $150.00 for all transactions.
6. No desk fees just like all other realty companies.
7. You are responsible for all your business needs such as stationary, cellular phone, and related business requirements.
- article on Exit Realty based on interview with founder
- [mms://video.lantrax.com/exit/UpClosePersonal18min.wmv Exit promotional video]
Join Date: Jul 2006
Join Date: Jul 2006
Join Date: Jul 2006
I went to a seminar recently that was put on by a rather wealthy individual. He touted a realty conglomerate (EXiT Realty) he belonged to as being the best thing in the business. As usual, the attendees bought it--even the question was asked: "What possible reason would anyone have NOT to join EXiT Realty?" I wanted to raise my hand and answer it.
How EXiT Realty sells itself is by exploiting every realtor's fantasy of being rich and successful. EXiT offers three things: One, if you make more than $100k a year, you get 90% of any revenue you bring in above that; Two, if you recruit someone to EXiT, you get 10% of their sells for life; and Three, there are no desk fees/monthly costs.
The catch? The commission you get on sold houses is only 70%. Standard commission from any other brokerage is 80%. EXiT bypasses this concern by stressing that they don't charge fees, and that if you were to go with any other group, you'd be bogged down with a ridiculous amount of hidden costs. Besides, once you reach $100k in commission, your cut goes up to 90%--no other realty group offers that.
Did you know that the average realtor makes only $47k a year? Did you know that 83% of realtors drop out of the business within the first two years because they aren't making money? Those two facts alone should tell you why EXiT isn't as amazing as the attendees of the seminar were led to believe.
Pretend you are an average realtor: You'd have to sell 1 house a month to reach $47k a year (assuming each house sold went at $200k-- Utah's average house cost). Since your earnings are below the $100k, you only received a 70% commission. At 70% commission, you make $600 less per month then if you were at 80% commission. I'm not an expert in the business, but I'm pretty sure that NO realty company charges their realtors $600/mo in desk fees and paper clips. Now lets say that you managed to recruit 2 people a month to EXiT. If you're REALLY lucky, maybe 1 of them didn't quit by the years end... and if you're even luckier, by the next year, that 1 person managed to make $50,000 in commission from selling. That's $5,000 in your pocket! -- Almost enough money to make up for one year of your annual loss from joining EXiT!
Now pretend you are twice as good as the average realtor: You sell 2 houses a month, or almost $5,000,000 in sells a year. By year's end, you'd almost reach $100k in commission, but not quite. Your earnings were still taxed at 30% instead of the standard 20%. Congratulations, EXiT realty made $16,700 more off of you than if you would have joined a different brokerage (minus the paper clip and staples fee of course).
In fact, you would have to sell FOUR TIMES the amount of an average realtor to make more money with EXiT than another group. And if you're THE realtor god everyone hears about and selling 5 houses a month ($12 million in sales annual); yes, you're going to be mighty glad you went with EXiT-- no question about it. And hey, you might have even managed to recruit 100 realtors into EXiT -- 23 of which stuck around... maybe 12 of those are selling houses regularly too, and maybe 6 of those are doing pretty well. In that case, I'd say you should send a big box of chocolates to the owner of EXiT for making you richer than the ACME brokerage down the street. Then again, with all the new recruits and sells you've been doing, maybe EXiT should be sending YOU the chocolates.
02-15-2007, 07:23 AM
Over-promise & Under-deliver
I'm an agent at an Exit Franchise presently, but I won't be here for long. I'll be headed to RE/MAX in the next few weeks. I'm just sticking around long enough for them to pay me the commissions they owe me, which they claimed would be at the beginning of March.
In this case, it's not the corporation that's at fault, it's the owners (whom are actually regional owners - truth be known). However, they "drank the Koolaid", got greedy, kept telling themselves everything was fine, and kept propping themselves up mentally with affirmations. It's obvious they veered off their biz plan, and made some very bad decisions, thinking they were going to get rich fast. They made a lot of promises, and now they're taking a number of families over the cliff with them.......
Granted, this could happen in any business. Any team is only as good as its coaches, or in this case, the biz is only as good as the owners and management. So some of the things that are causing the situation I'm in could have affected another brokerage, or a lemonade stand for that matter. My point is this, the model is such that it does not allow for much middle ground - you're either doing well, or you're sucking wind in a big way.
Here's what I've learned about the Exit model. The office better be established and cranking business, or have deep pockets and a good biz plan. 20% is awfully skinny, esp. under our present market conditions. And if they don't keep the desks filled, and the franchise sales in motion, then things go downhill in a hurry.
Sure they don't have any desk fees, but they have transactions fees, and as we found, they can jerk them upward at any time. Ours went up $45 a side to assist them in carrying Exit's corporate plan to put billboards up all over the place. Billboards with just the logo and the tag line "Exit Realty is Growing". The problem with that? Sure it establishes brand identity, but billboards, like yellow pages, are directional media. You use them to help finalize the buying cycle (connect buyers & sellers). True, you can use them to market image and establish brand identity. By why would you put up a billboard without any contact info on it?!? No phone numbers, no addresses, no URL's, no email addresses - absolutely nothing. And then ask your agents to help pay for the program and they have no say over it? What's next?
Let's return to the 20% that keeps the brokerage alive. Sure, if you're an Exit agent you pay for very little, if anything at all. That means all expenses that are normally paid for by the agents are coming out of the owners pocket. Yet if there are not enough agents, thus not enough sales, then the slide into the black hole begins. The breakeven point is a razor's edge for an Exit brokerage. The agents are not helping to defray many expenses.
Then there's the Exit Resource Center. What a friggin' joke. Sure, it's convenient, and you can purchase all sorts of supplies and services there. And if you do, then the regionals and/or brokerages get a kick-back. Evidently that's one of the pillars that the franchises are brainwashed into thinking will help them sustain their business. I was wondering why I got scolded when I bought my biz cards elsewhere - my broker didn't get his cut. Exit corporate does a nice job of motivating sales thru the Exit Resource Center and makes agents aware of new product or service offerings. Nearly every agent conference call that's supposed to be for training has a sales pitch attached that you have to sit thru to get to the real content. Make sure you don't step outside of the box either if you purchase goods or services to market or promote yourself. If your brokerage is ailing, you're probably going to hear about it. Sit down, have some more koolaid.
I tried recruiting, but being a "gnat" buzzing around my fellow realtors preaching the merits of Exit was difficult to stomach. I value my professional relationships & friendships, and I too disdain pyramid schemes and multi-level marketing. Sure, ask me why I got onboard then. Suffice it to say, my sip of koolaid was tasty, and I was rather thirsty.
Be careful of the Exit brokerage you get into. Find out if they'll tie your hands on recruiting. Ours did. They limited how we could market for new agents, and we couldn't step on their toes in the marketplace. Our brokers stated they'd contacted nearly all good prospects in our markets (small markets), and already had relationships established. Basically they wanted a piece of every recruit, and would try to work deals. There's nothing preventing Exit brokers from splitting the residuals with you. They may bill it as 10%, but if they claim they already were working on someone you brought in, it could get weird.
About the only recruits that seem to join Exit are newer folks, at least in our state (YMMV). That means there is plenty of training necessary, they don't come up to speed rapidly (there's that 20% for the brokerage rearing its ugly head again), and they will require considerably more broker oversight (unless you're a good sponsor and take time to make sure your recruit is learning, motivated and moving ahead with his biz plan). The only way to make decent coin off the residuals is to have a number of recruits under you (you get capped off at $10,000 per recruit). You do the math. If you wish to make some residual $$, then you'll need a number of recruits. Most will probably be newbies and need regular assistance. And I'm OK with that, I actually enjoy it. I also enjoy selling real estate. Therein lies the "rub" - there's only so much time in a day, how do wish to use yours?
I sat in on a recent "60 Minutes with Exit" recruiting session that we put on. We were told to invite associates and bring spouses (cuz corporate likes to know our families are behind us.....are you sharing your koolaid? You should be!). My rough estimate - of a room occupied by approx. 100 people, maybe 30 were viable candidates for recruitment. The rest were family or from real estate associated businesses that were just there to listen to the speaker and eat shrimp and drink cocktails. And the speaker sucked - it smelled of pyramid scheme, and friends of mine told me so.
What goes up, must come down. Sure, "Exit Realty is Growing" - but for how long? It may be a new biz model, but it's not the first, and it won't be the last. Someone will take this model and tweak it. Some Exit regionals and franchises will crash & burn. Some will prosper.
As others have said, pick your working environment carefully. Cherish a good situation, remember the grass isn't always greener (even if it's a new variety), and if something smells or looks funky, then listen to your inner voice. It was put inside of you to protect you.
I'm "Exiting". I've had enough of the BS. I no longer like the taste of the koolaid. I don't care if Steve Morse is sending me an "Affirmation CD". I don't ever want to see another "Morse Code" email. I'm looking for solid ground, and a business model that doesn't attract "pie in the sky" owners and brokers who eventually forget what integrity is when the going gets tough.
My advice if you're thinking of joining Exit? Ask yourself why, run the numbers, look at your personal marketing plan, and listen to your inner voice.
Join Date: Jul 2006
01-29-2007, 09:47 PM
Re: Exit Realty
That business model makes no sense. Your recruits have to at least match your own production, otherwise you're paying an extra 10% to your higher-up for at least some of your money.
So what if your recruits aren't working? You're forced to spend time hiring more, or you just stop working as much since paying 10% to someone for doing you a favor and bringing you in is not what anyone wants to do.
Not sure why anyone would subject themselves to this scam, when there are plenty of great brokerages of all types, with great splits and training.
New real estate webmaster
Join Date: Jan 2007
It reminds me of Amway...does anyone remember that)
Yes they give you 70% to start, yes they will give you $$ for bringing on agents...but you top out with that. $10,000 max...(even though thats pretty nice).
Anyway, their fees are high. It cost me $$$$ alot to join, you must pay their franchise fee immediately, when you sell you have some pretty high fees, if im not mistaken, i took and average comission and according to my calculations the end result was like 52% after all was paid, maybe less. Thats for a new agent.
They didnt want to pay for alot of advertising, maybe 50% of my first ad. I get 50% for ALL my advertising now.
What bothered me more than anything, was the agents attitude, scary but i thought some were brain washed.
These are only MY opinions, thats it...you need to find out for yourself, i left after 4 weeks.
01-28-2007, 12:35 PM
Re: Exit Realty
Hi, worked there for a year, survived but never prospered. Left 4 days after my contrcat came due, went to RE/MAX. It costs me about $15,000 (private office with window.....lol) a year to be here plus about $10,000 in my personal marketing so on a $100,000 year, I am already making a few thousand more then Exit and when I meet people I do not have to justify who RE/MAX is and what we do. But wait it gets better, every penny over 100k is 95% mine as all my fees and advertising is already paid. Exit goes to 85/15 after 100k so you see it generates people who tend to not produce, (oh and there is a 3% transaction fee so you really are 67/33) not the type a newer agent needs to surrond themselves with. Listen I have been happy at RE/MAX for over 5 years now and Exit long ago folded in my area, but this is not to say RE/MAX rules, just pointing out that Exit doesn't. Get the best split you can with any brand name company( helps until you have a good data base) and make sure the broker/manager is going to be there for you and you will do fine.
01-28-2007, 10:57 AM
Re: Exit Realty
I would totally agree with Eric Bramlett on this one. Combining the recruiting sales with real estate sales often results in LESS net income and not more. We actually track how agents do in our market when they go from one brokerage to the other. It happens that way almost 100% of the time. Remember your goal is to increase your NET INCOME.
IMHO, there are 3 major components of a great place to hang your shingle: 1) Does your office provide market presence to make it EASY to list (unless you have an established referral base ala JudyO). Do they have an internet strategy? That is a plus! 2) Do they provide great training 3) A fee structure that allows you to succeed RELATIVE to the marketing support they provide.
The residual for assaulting your fellow REALTORs in every conversation IMHO is kind of like tying a pork chop around your brokerages neck to make the dog like you. We are considering such a program at our brokerage right now, BobbyJ.
I think what is of more value than the minimal most get in return is the 4200 leads that our brokerage will generate this year for our agents. At our current closing rate that will be 150 closings spread equally over 110 agents...
Then there's hands on training with e-commerce and the like. Sounds like that trumps the pittance that you might get from having to recruit FOR your broker. (grin) Also this will MORe than make up for differences in costs.
01-28-2007, 09:14 AM
Re: Exit Realty
One more point - most agents that make the switch to Exit (or to Keller, or to any agency that rewards recruitment) think that recruiting is passive. I can tell you, from experience, that recruiting is extremely active. I spend every other week giving an hour presentation & lunches @ the real estate school, run ads in multiple publications, send out email blasts, & interview at least one new agent a week. That's a LOT of work. Our agency is doing a little better than the average on retention - but remember that there's a 90% washout rate among new agents. So - you're going to need to recruit 10 agents to have one consistent residual income stream (and that's if you & they stay @ Exit indefinitely.)
Austinguy mentioned above that most KW agents ended up making pennies off their profit sharing. KW started in Austin, and has grown as explosively as Exit is in some areas partially due to their profit sharing. I was with KW for 2 years - recruited one agent, & never saw a dime. However, it wasn't the KW profit sharing program's fault - it was everything I listed above. Recruiting is hard & time consuming.
Bottom line - focus on selling houses! If you want residuals - sell insurance, or buy rental properties.
01-28-2007, 09:07 AM
Re: Exit Realty
Just my 2c!