Saturday, March 31, 2007

02-15-2007, 07:23 AM
esau esau is offline
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Default 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.

3 comments:

Tomas Quintana said...

sounds like you had a hell of an experience! You did not mention what market you are in, but I am sorry to say that no complaints here! We are growing, and making money while the other offices complain about how bad the market is. Our broker does not make us buy anything from the ERC, we have a great atmosphere, and I like receiving the residual checks from sponsors. We ARE NOT required to recruit anyone, and noone gives you a hard time if you simply focus on your sales. People love saying negative things about a system the don't understand. You were part of EXIT (I assume you already left), and obviously did not do well there; I am sorry to hear that. I don't think it matters what company you work with as any agent with poor training will have poor results. Good luck in your career, I truly wish you the best but I would like for you to know that there are many EXIT offices where agents are very happy and making money! I interviewed with all of them, I even worked with Century 21 where I learned NOTHING! I am glad I made the move as are the rest of the agents in my office. In the past 3 years, 4 agents have left, and these were the underproducers you will find in any real estate company.

hohwald said...

I've attended two 60 Minutes With Steve Morris agent recruiting presentations and performed several interviews with local EXIT agents and brokers and here's what I believe about the EXIT brand. Steve Morris is the founder and
President of EXIT Realty Corp International, the firm that sells the franchise brand by State areas to EXIT State Level Territory Owners that in turn sell the Franchise to local broker owners. The local Qualifying Broker owner is an independent business owner and they operate under permission from EXIT REALTY as a franchise brand licensee. Note that the EXIT brand is only as good as the local broker owner makes it, if she or he is a good Broker Owner with sound Marketing Management & Real Estate skills then that firm should prosper and do as well as any other franchise Real Estate brand, after all we've all been in McDonald's restaurants franchises that were clean and the food was fresh and other McDonald's restaurants that were dirty and food was cold, some McDonald's stay in business for years, others go bust, but even the best was still only as good as the individual McDonald's franchise owner. The difference is that McDonald's restaurant brand has a very strict franchise program, just because you have the money for a
McDonald's restaurant does not necessarily mean you get a franchise, one has to meet the strict standards that McDonald's require prior to ownership of a franchise (you have to demonstrate quality restaurant management skills and be able to prove that you can operate a restaurant prior to then letting you loose with their McDonald's brand on your own), but It appears from my research that the standards set by EXIT for a Broker Owner to acquire an EXIT Real Estate franchise brand is as simple as If you've got the money and you meet your States legal minimum requirements to operate a Real Estate brokerage firm then you can be an EXIT franchise owner (the reason for the fast growth of the franchise brand is because it's very easy to acquire). EXIT does not have an equal program to the McDonald's "Hamburger University" that would prepare the Broker Owners to actually be able to perform at a higher level than other similar firms so each EXIT office success or failure is based on the individual Broker Owner with very little input from EXIT corp, why?....Because EXIT REALTY CORP INTERNATIONAL is all about selling Franchises...not selling Real
Estate. They do offer Exit RE education online, web support and regional seminars which appear to be good but also not significantly different from any other professional RE education programs out there because lets face it, the EXIT model is not really any different from any other RE firm (i.e. A RE FIRM GOAL: Have as many agents as possible to lists and sell as much real property as possible so the Broker Owner can get rich, not the individual agents) the EXIT RESIDUALS hook is just designed to recruit agents (not make agents rich) there is no HOOK for the consumer that is
buying and listing property which is the goal of the firm (as well as no noticeable National Corp Brand advertising like with re/max or C21 to the actual consumer ether). My point is EXIT "is what it is", just another typical Real Estate Brand in the sea of Real Estate Companies that are all fighting to survive on the backs of the individual agents. With the national average for Real Estate Commission (according to NAR) dropping year after year and the typical broker owner and real estate agent is faced with a lower overall average income year after year because of this trend, the hook of "Think Residuals" is just a tool for the Broker owner to use to recruit more sales agents and is only presented as supplemental income for the agent, not the primary source of income to help offset the reduction in commission trend for the agent, the model still requires agents to list and sell property. NOTE: The EXIT residual program flaw is that it is
only as good as the local broker owner that is implementing the program for that agent, even though EXIT Realty Corp claims they are responsible for payment of residual funds to Exit agents, the residual funds first must be collected by
Exit Realty Corp from the Individual local EXIT Broker owner where the sponsored agent is active, and if that office has a broker/management staff that has poor skills and even suffers from mismanagement of funds then residuals may not be sent to EXIT corp in a timely fashion, I've heard stories from EXIT agents of Residuals taking up to 1 year to be paid when Steve Morris states clearly in his presentations that the funds are paid by electronic transfer into a Exit SUCCESS Master Card, this may or may not be the case with your local EXIT owner. The bottom line is that I suggest
that before you make a decision to join your local EXIT RE company, you should meet and greet your local EXIT franchise broker owner and judge for yourself the quality of that firm as there are several EXIT Broker Owners in many markets that are very reputable and experienced in their market and acquired the EXIT brand to help build their current strong market share and they pay the residuals earned timely as Steve Morris claims and their agents are earning a good living, others in some markets may be just mismanaged underfunded firms with poor marketing skills and are doomed to fail and their agents may be starving and also may never see a residual payment on time during the failure process, but ether way it's the individual Broker Owner that is ultimately responsible for the success or failure of any Real Estate firm, not necessarily the franchise brand.

Ben said...

It is sad when someone gets burned like this and feels the need to tell the whole world what a sham an entire international brokerage is. I wouldn't wish the same thing on RE/MAC, CB, Century 21, or any of the big franchises. If you actually stood behind what you were saying you'd probably leave your name and contact information so someone considering EXIT Realty could call you and talk to you about it.

I actually agree with some of the things you said though. One of which is that 20% is skinny when it comes to providing services for real estate agents. I've actually come up with a system that's solved some of these problems I'm very proud. Anyone considering EXIT Realty (or any real estate agency) should take a look at it...

Head over to TheExitPro.com and see what really lies ahead for an EXIT Realty professional.