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.