The Real Estate World will Change
As I sit in my office thinking of how the real estate world operates, and I’m talking to Realtor’s and Real Estate Franchises, I see the world changing before my eyes. Since I am one of the highest ranking ERA Agents in the world, I feel like I can honestly evaluate all franchise models and tell you why I don’t think they can or will survive this downturn.
ERA for example, charges me a 6% franchise fee on every dollar (gross) that I bring in. Newer franchise owners are charged 8% of every dollar. When my contract with ERA expires, they will try and stick me with the 8% number for certain when they ask my company to renew the agreement with ERA. RE/MAX, Century 21, Prudential and Coldwell Banker are similar models.
If you are a new or low producing agent, what you get for that 6%-8% is tons of support and or training and a generic “box” of marketing tools to boost your self esteem and make you look like you have experience to the uneducated consumer. If you make $50,000 per year, that $3,000 to $4,000 per year in franchise fees is well worth it. After all, you are giving 50% to your broker anyway.
Once agents start to get it (the few who do) and start to sell more real estate, that 8% number starts to choke us. When you factor in what you get for your money, those figures are so unwarranted that you start to wonder why you pay them? In 2008, my Team, The Arcuri Team paid over $57,000 in franchise fees to ERA. Did I get a free ticket to the ERA Convention? NO! I’m in the top three Teams in the world in 2008 for ERA. Has anyone called me? NO! I have been one of the top agents in the world with ERA since 1995. Have I ever shaken hands with the CEO of ERA? NO. Those privileges are reserved for “the good ol boy network”, the same agents every year. One agent who is on the lecture circuit with ERA is the wife of a big military man. They live outside the Base in their town. Her husband sees to it that she gets all the leads from that Base. WHAT CAN SHE TEACH ME OR ANY AGENT? She is jet set across the country by ERA to tell everyone how her magnets are prettier than everyone else’s and that is why she is so good! She does not know why she has success! 2 + 2 = 4. It really is insulting to the TRUE top players on that organization.
Agents are getting tired of the “same old same old” and we are expecting marketing in exchange for our dollars. I pay for 100% of my marketing! What was ERA’s part in my 2008 sucess? I really don’t know. I saw ZERO ERA ads in Tampa, no T.V. ads in Tampa. What I DO know is that with that $57,000, I certainly could have used that money in the TAMPA market! How do I benifit from handing ERA $57,000 per year and nobody knows your name?
New franchise models like EXIT Realty are the future. They are not taking advantage of their agents and they allow the agent to keep more money and make more money with their referral program. Agents there can make more than 100% of their commissions. MORE THAN 100%! Franchises like EXIT Realty, Charles Ruttenberg and Future Home Realty in Tampa Bay charge a small fee off each closing. Models like this are popping up nationwide and those models ARE the future of real estate. GREED will kill the traditional model and in five short years, the Broker landscape in this country will look very different than it does today. The greedy dinosaurs of today will fall to the wayside just like the real dinosaurs of yesteryear.
For more information, visit my website at http://www.headofrealestate.com
Filed under: Florida Real Estate, Property Tax, Sports, Uncategorized, florida, real estate, tampa real estate, tampa realtor
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Vince, At last you have seen the light. Thank you for the accolades. I was with ERA in the last century and Re/Max and Prudential and none of them have changed. Even C21 operates on the 20th century old school mentality of the 20th century, irregardless of their name. I hope you are considering looking ….. or better yet moving to Exit.
Ask me how! I did last year and wish I had made the move 2 yrs ago when they opened up in Va. OBW I met Steve Morris CEO before I even joined Exit, met him twice since and Tami Bonnell US President, several times. Exit has dynamic leadership. Thank you, Thank you Thank you ….. for your extreme production and kind remarks about Exit.
Rick Sterling, Broker
Exit Realty Professionals Virginia Beach, Va.
In 2006 I was Virginia’s Top Producer in the Century 21 system, a highlight in my career as a consistent Top 10, Centurion and Double-Centurion Producer of the Century 21 System. I also paid $127,897 in 2006 to my then C21 broker, the bulk of which was the 6% C21 Corporate fee. An additional 2% was tagged on by my broker and then some additional junk fees on top of that! Between those expenses and the very heavy split to the brokerage which was calculated after deduction of those fees, in twelve years with Century 21 I had paid out over $783,200! I kept accurate records, so I know to the penny what it cost me. Granted, I made a good living as well, but I disagree that my royalty fees paid for “tons of support and or training” whatsoever. That may be true for ERA, but definitely was not my experience in Century 21. I was completely self taught in that regard, and it’s a wonder I ever survived my newbie years. The only training I ever received was in the “School of Hard Knocks”, or the osmosis method. An occasional guest speaker/ purveyor would show up at an office meeting to promote a product, often with the broker as a vested partner in that product. Office paid advertising? The office would pay 50% of specific advertising with caps, provided it was only branded by the office and only in publications of their choice. The requirements were so restrictive that I mostly paid 100% of my own advertising.
There were no senior agents or management willing to pass down wisdom or knowledge. In fact, management considered up and coming agents as a threat to their business, as competing working agents. Professional jealousy and cut-throat office politics were a constant distraction from production. I never once met anyone of significance on the regional level of Century 21, much less on the national level, that ever shook my hand personally and thanked me for my contribution to the growth of the brand. The closest thing I ever got to that was an annual rubber stamped thank you letter from the then CEO of Century 21, Tom Kuntz. I interested dozens of future agents along the way that eventually became licensed and never once received a financial benefit of any sort for introducing them into Century 21, much less a thank you.
Don’t mistake what I am conveying here. I don’t begrudge my former broker his profits through me. No one forced me to be there. I wore the “gold” jacket proudly. It was completely my choice to be there.
The root of my disgruntlement was not a product exclusive to the management of that particular C21 office, but moreover the result of an antiquated broker centered business model that views the agents as chattel and has become a dinosaur in the industry of real estate. It is no longer an attractive launching point for newbies, nor an acceptable future for career agents. There is a new generation of professionals in real estate, and they expect more. And in my opinion, they deserve more.
My restlessness with this traditional model came to fruition in 2000. I began to realize that I was paying a very high premium for marginal value added. I was a rainmaker for the brokerage and it was benefiting more from my presence that I by my association with Century 21, as evidenced by the owner/brokers blatantly lavish lifestyle. C21 was looking like an expensive choice, and I had a better split than most agents, excepting the family members in the brokerage.
I began looking around to see if the grass was greener on the other side. RE/MAX was the only model that looked any different from what I already had, but the local RE/MAX just didn’t have the look and feel I wanted from an office. Everything else was the same, just a different name. So, I resigned myself to staying where I was and got caught up in the incredible real estate BOOM for the next several years. But, I never stopped looking for a better place, that honored the agents as the most important part of a brokerage rather than as disposable foot soldiers on a battlefield.
In the spring of 2005, I was on vacation with my family in the Florida Keys when I came across EXIT. Their signs were everywhere! I’d never heard of EXIT, so I googled it when I got home and looked at their business model. I scrutinized this model, the “EXIT Formula”, thoroughly for flaws. I am very analytical by nature and was after all a tried and true Century 21 agent my whole career. The EXIT split was better than anything I had ever received BY FAR, and no royalty fees, no desk fees. There was a proactive stance from the very top of corporate on down to the office and agent level that perpetual improvement of the agents, through education and training, is paramount to their success! EXIT was providing, actual mentors and trainers with real experience to share and teach. Another benefit was access to group rate health insurance, a major consideration in my household. The icing on the cake was the sponsoring bonus system that meant I could benefit by helping grow the business. At last, a means to allow me to retire someday, rather than just a last final commission check! I kept digging for the flaw in the program until I finally realized that the flaw was me. I wasn’t in it!
I checked for a local EXIT office and because they were new in Virginia, the closest office was too far for me. I was so intrigued by the possibilities of this rapidly growing brokerage franchise that I decided to open one. I met with the regional owners of EXIT who checked me out thoroughly before approving me to buy a franchise. That was a good sign; they weren’t selling to just anybody. In late February of 2007 I broke the news to my broker, who thought I was just negotiating for a better deal. He would have offered me a few more % (whoopee) to hang on to me, but I wasn’t leveraging. I was just EXITing, and he just didn’t get it. It wasn’t just about the money. I initially was told I could take my time moving out. The very next day at 11AM I was told by the manager to immediately vacate my office space and contents of many years with no notice, on a Saturday morning with the annual Century 21 Regional Sales Awards Ceremony that evening, where despite my managers attempts to sabotage my efforts to attend, I was honored as the Top Producer in Virginia, and #2 Top Producer in the five state Century 21 region. What a way to show respect to my twelve years of loyalty! I received my last emmy (Double Centurion®). The next morning I drove to Canada for broker training with EXIT where I was personally greeted by the CEO and founder of EXIT, Steve Morris. I have had personal conversations with Steve on several occassions and have also met every senior excutive in corporate management, as have most of my agents. They are the trainers and mentors of EXIT. I and my agents are on a first name basis with the regional franchise owners. I have never regretted my decision to make my exit to EXIT! My view of real estate as my chosen career has been renewed, reborn. There is a whole new vision of dignity and self respect here that just doesn’t exist anywhere else. The AGENT is the center of this business. Without the agent, there is NO BUSINESS.
EXIT is the fastest growing franchise ever, and for good reasons. Agents are figuring this out and investing in their futures. Check it out for yourself! 55% growth in Virginia in the last year alone. In that same period Keller Williams only gained 7%. Every one else, ERA, Coldwell Banker, Century 21, RE/MAX, Long & Foster, Weichert, and others lost huge numbers of their agents and the percentages are continuing to skew dramatically. What does this tell me? Vince Arcuri is dead on accurate when he says “New franchise models like EXIT Realty are the future…..GREED will kill the traditional model and in five short years, the Broker landscape in this country will look very different than it does today. The greedy dinosaurs of today will fall to the wayside just like the real dinosaurs of yesteryear.”
Richard Snow
Owner/Broker
EXIT Realty Expertise
King George, Virginia
Vince, I have to agree with everything Rick and Richard have had to say ,and my experience with EXIT has been almost identical to theirs.
I was previously with Remax for 3 years from July of 1998 till June of 2001. For the 2 full calendar years I was with Remax I was ranked as the #11 highest producing agent in the Carolinas and Georgia region for 1999 and #8 Highest producing in 2000.
I too never met anyone within the Corporate structure of Remax. There were no training or mentoring systems in place , which was painfully obvious in the high failure rate of most of the agents. In the 3 years that I was with Remax the brokerage charged $2000 + per month in desk fees 5% off the top of my commissions earned , and $300.00 per closed transaction. I averaged 75 closed transactions per year. Here is the math….over $186,000 paid to the firm for a desk, phone and a 6 x8 space in 3 years.
Yes I was making a lot of money but $186,000 is absurd.
In 2001 I was tired of being bled dry by Remax. I looked at various franchises, but they all looked the same with the exception of Keller Williams and Exit. The problem with KW was no one could accurately explain how the “profit sharing” really worked. I am glad I didn’t choose KW since not a single agent that I have talked to has ever received any profit sharing.
In my EXIT office in downtown Beaufort SC we have paid out almost $600,000 in sponsorship and retirement bonuses to our agents. The agents love it.
I signed on with EXIT in 2001, The only trouble I had was trying to find the problem with their system. The deeper I dug the more I liked what I found. When I flew to Canada for broker owner training,( with Steve Morris) I knew this was the company to be with for the future of Real Estate.
Exit is a Corporation that puts the agents and their families first, they are absolutely committed to training at all levels. They teach Brokers, Owners and Agents how to truely succeed in the industry. The level of support provided at Corp head office is second to none. From Steve Morris the CEO, to the receptionist who answers the phone when you call in, they are all professionals. Everyone I have met at EXIT since 2001 has been truely interested and vested in the success of all EXIT associates.
For any realtor or broker in this industry Exit is THE ONLY Company that provides opportunities where there have never been any before.
The BEST training in the industry, additional income streams, a vested interest in building the company, owning your own business within a business (without the overhead), and reitrement security for you and your family!
EXIT REALTY offers the opportunity of a lifetime for the real estate professional and we have things that no one else in the industry has, and more importantly, they would love to have.
So WHY EXIT? Because…..
We
Help
You build a better career for life.
Greg Bennett
Owner/Broker
EXIT REALTY of Beaufort
EXIT ISLAND REALTY
Beaufort & Bluffton, SC
This blog post was quite interesting. It almost sounded like a vent but it really made since. I am an EXIT agent in Alabama. Far from being one of the best. As a matter a fact I have only been at it for 2 years. Started out well but the down turn hit me hard and I had to get a real job! hahahhaha! I still however maintain my license and my membership with EXIT and my Board affiliations. I am able to do this because of the EXIT model. I only pay as I close. The annual dues is minimal. I budget for my own marketing. I attend as many functions as time allows. Heck I have had met and chatted with our VP of the Nation and State regional manages. Worked with them side by side on habitat builds and chatted as friends in many ways. That is what makes EXIT different. Those that are filthy rich carry on just like regular folk. Of all the EXIT people I have met there is not a snob or stuck up in the bunch.
The feeling of camaraderie and having the same goal being on one accord makes the difference. The Sponsoring program is a major driver in the EXIT model. I have 2 Agents and they generate a effortless income stream. Meaning I get a bonus as long as they and I are in EXIT. All I did was bring them to EXIT and keep them motivated. So it is more to the success to EXIT than just the model. It a mind set of the Agents. The excitement of being part of something unique. The drive to make it grow. EXIT works because the model shares the wealth. The straight line residual is commonly taken as multi level but it is not. I can’t believe anyone would be an Agent under any other Model. EXIT to me is a no brainier.
All of you better look at Keller Williams Realty - we were just ranked THIRD in the United States:
AUSTIN, TEXAS (March 2, 2009) — Keller Williams® Realty Inc., announced last week at its annual convention in Orlando, Fla. that it is now the third-largest real estate franchise in the United States, surpassing RE/MAX® International. According to Steve Murray of REAL Trends, a leading source of analysis and information in the residential real estate industry, the Austin, Texas-based company claimed the number three spot with 72,794 U.S. associates at the end of 2008.
“The success of Keller Williams Realty can be directly attributed to the hard work and perseverance of our associates and the soundness of our economic and organizational models,” said Mark Willis, CEO of Keller Williams Realty, Inc. “While others might be looking at this market and seeing fear and uncertainty, we have always approached it as our opportunity to shine and grow. And that mindset has paid off.”
The company has been gaining ground for the last three years, outpacing pervasive downward trends in the real estate industry. From 2006 to 2008, Keller Williams Realty increased its associate count by 52 percent, market share for its offices increased 83 percent and agent gross commission income went up 35 percent. Currently, the company has 679 offices operating in the United States. The company also shared more than $30 million in profits with its associates in 2008 through its company-wide profit sharing program.
“Through profit share, our phenomenal coaching and training and our technology offerings, we are offering agents their own ‘bailout plan’ for this market.” Willis added.
The company also announced that after years of searching for a partnership to provide its associates with affordable health insurance, they are moving forward with a solution.
The soon-to-be-launched Keller Williams Health Providers Program will include options for major medical, limited medical, catastrophic coverage and a separate cancer plan. The health insurance coverage is the first step toward a total wellness program for associates.
“We have always been very aware that as independent contractors, our agents face barriers to obtaining health coverage,” said Mary Tennant, president and COO of Keller Williams Realty.” We know that for many, this new option may alleviate some of the stress that they face in today’s economy. After all, our associates are not just our partners – they are our family.”
Last fall, the company also announced the launch of KW Commercial, a new division of the company dedicated to providing commercial real estate associates with specialized technology, marketing tools and resources. KW Commercial already has more than 220 active brokers across the U.S. and Canada.
“Our goal is to create synergy between the residential and commercial sides of our Keller Williams offices, raising the bar for the service we provide to our clients,” said Buddy Norman, president of KW Commercial. “We envision our commercial and residential agents working side-by-side, sharing referrals and helping our offices grow.”
“Our growth in the last year and now becoming the third-largest real estate company in the United States was a true team effort and a company-wide win. We are so grateful for all of the leadership and commitment our associates have shown to power through this shift,” added Willis.
About Keller Williams Realty Inc.:
Founded in 1983, Keller Williams Realty Inc. is the third-largest real estate franchise operation in the United States, with more than 690 offices and 74,000 associates in the United States and Canada. The company, which began franchising in 1990, has an agent-centric culture that emphasizes access to leading-edge education and promotes an economic model that rewards associates as stakeholders and partners. For more information, visit Keller Williams Realty online at (www.kw.com).
IF YOU HAVE ANY FURTHER QUESTIONS, PLEASE DO NOT HESITATE TO CONTACT ME!
Cathy Taylor, ABR
Real Estate Consultant
Keller Williams Realty
Alabama Gulf Coast
http://www.cathy-taylor.com
251-605-6894
Like I said, the traditional models are in trouble! Keller Williams sucess, like EXIT Realty is simply proof that the real estate landscape has forever changed!
Vince,
Welcome to the EXIT family! We are glad to have you on board. I will pass on your information to all our Columbia and Lexington SC agents. Looking forward to shaking your hand in DC this year and please don’t be a stranger…good luck and may you wear out your EXIT success card! (Just ask Greg Bennett!)
Joseph (JP) Piccinini
Co-Franchisee of EXIT Real Estate Consultants
JP@JPHOMESFORSALE.COM
jphomesforsale.com
EXITREC.COM
Welcome to EXIT! It’s great to see seasoned successful agents that ‘get’ the EXIT system. There is no question, EXIT is changing the face of real estate.
Looking forward to meeting you in DC at convention. Let’s paint the town TEAL!
Laura
I resonate the sentiment. After producing 1.7 million in GCI with RE/MAX, I have moved to Keller Williams. It is an intensely more intelligent business model. RE/MAX cashed in 2 generations of goodwill built by agents bringing their own businesses to the table when it left the 100% model. They used to be the best, they became the biggest, and soon they will be neither because they have abandoned their core philosophy. The recruiting model is the future of real estate. One of my previous clients became an EXIT franchisee and is #2 in sales in the middle Tennessee region. Good luck with your new endeavor.
I am considering changing over to Exit and I see and read some great advantages for a Realtor but what I don’t read is the advantage to my clients. One of my clients even did research on Exit and asked me not to change companies. How does Exit actually benefit a client. What is the advantage to listing their home with Exit?
I can’t believe the question! Here is the reply. If you work for a company that puts money in your pocket and you are earning more and more money, does it not make sence that your clients can benifit from all the additional money the agent can now spend on marketing? HELLO! And by the way, EXIT has better marketing tools than ERA. There is so much to the company that you and your client need to educate yourself on EXIT before making a decision like that. Remember, some fool told Elvis to go back to driving trucks because he could not sing! Contact your local EXIT Broker and let them explain. I’m certain you will get a confidential interview.
To Cathy,
Keller Williams might be the third “largest” real estate brand, but in my opinion, being the largest, does not mean being the best. I would rather be with a company based on quality, then quantity, and that is what Exit provides.
To Exit Question,
When it comes to clients, I am a firm believer that if the real estate agent is happy with his brokerage, than the client will have a better experience with his agent.
In the end, it doesn’t matter who an agent is listed with, from a client prospective. What matters is what the agent does for that client, because after all, the client only deals with the agent. And contrary to the old tale of a certain real estate sign will bring a seller more buyers, it just isn’t true. A buyer could care less who’s sign sits in a yard of the home they love…all they care about is getting the home.
So you should ask yourself, what is best for you, as an agent. Giving more of your money to a company that doesn’t give the same amount of quality back, or going with a company where you keep more money in your pocket, and offers you a way to make additional funds through residuals? I believe you are misguided by asking the question, “what is the advantage to (my client) listing their home with Exit?”. They should instead be asking, “what is the advantage to listing their home with yourself?”.
In answer to what does the client get…. Please see an EXIT broker as soon as you can. Exit’s superior training will make you a better agent and I think your clients may benefit from that.
I’m the first EXIT broker in the US (March 1999) - The more I follow the EXIT training and culture the more I realize that this is THE BEST REAL ESTATE COMPANY OUT THERE! … Tools, Technology, training (at every level), support, and much more…
Become a better agent, join EXIT.