eXp Realty is a real estate brokerage that provides services for buying and selling properties. It is not a pyramid scheme, but some people consider it as an MLM company.
There is a good chance that you heard about eXp Realty through someone – a friend or family member.
Many people these days are looking for additional income, and you are most likely one of them. There was then an opportunity to work from home by joining eXp Realty as one of their agents.
However, as I’ll discuss in this review, there are some reasons why success with eXp Realty is unlikely. Experienced salespeople and well-funded recruiters are the only ones I can think of to have real success working as an eXp Realty agent.
As a disclaimer, I’m not affiliated with eXp Realty. It means I’m not paid to write this review. So you can rest assured that you will get an honest and unbiased review from me.
At the end of this review, I’ll also tell you the best alternative to the eXp Realty MLM program that has enabled me to make a full-time passive income online.
What is eXp Realty?
eXp Realty is a real estate company in the United States. It is a subsidiary of eXp World Holdings (EXPI), a publicly traded company on the Nasdaq stock exchange. The SEC has verified that eXp is completely legal.
In 2009, Glenn Sanford founded eXp Realty. It now has over 20,000 real estate agents in all 50 United States states and almost all Canada provinces.
eXp Realty agents split their commissions 80/20 up to $16,000 and pay a $85 monthly fee. This fee covers a wide range of tools and resources available to real estate agents. These tools include kvCORE, Skyslope, eXp World, Workplace by Facebook, and many others.
Since eXp Realty is a publicly traded company, brokers have the opportunity to own a portion of the company. Some of these opportunities are to receive shares each year when a broker sells their first home or when the company hires a new broker who then sells their first home.
Following that, the ICON agent incentive program gives high-performing real estate agents back the full $16,000 cap in company stock if they meet a simple benchmark.
Finally, eXp Realty offers participation similar to a 401k. Agents can participate in a program where 5% of their gross commission is used to purchase eXp stock at a 20% discount to the current market price.
Pyramid Scheme vs. Multi-level Marketing (MLM)
To find out whether eXp Realty is a pyramid scheme or an MLM, we should first take a look at the definitions.
Pyramid schemes, like Ponzi schemes, are illegal, but they often masquerade as MLM (multi-level marketing) programs. Traditional MLM programs are legal because they sell a real product through the channel.
Multi-level marketing (MLM) is a marketing strategy in which a company promotes its product through distributors who are compensated at multiple levels.
Pyramid schemes, on the other hand, are fraudulent schemes disguised as MLM strategies. A pyramid scheme differs from a legitimate MLM program in that in a pyramid scheme, no actual product is sold and commissions are based solely on the number of new people enrolled in the scheme.
The main idea behind the MLM strategy is to promote the product to as many distributors as possible in order to increase the number of sellers exponentially. The promoters receive a commission on the product sales as well as compensation for the sales of their recruits. So, in multi-level marketing, commissions are paid to people at multiple levels when a single sale is made, and the commissions are based on the total volume of sales made.
In pyramid schemes, money is simply charged for enrolling others in the scheme without selling any product. Only a few people (who were involved in the creation of the system) profit. If no new people can be recruited, the system fails and most promoters, except for the top promoters, lose money.
Regardless of legal status, it is important to know that many people have lost money while participating in MLM companies. Even with legal MLM companies, most of the profits (if any) come from recruiting new members and not from selling products.
Before joining a multi-level marketing company, try to meet former members/sales associates and learn from their experiences. These stories abound on the Internet, and there are also support groups where people come together to warn other potential members.
Is eXp Realty An MLM?
The answer is yes and no. On the one hand, eXp Realty does not even show up in Wikipedia’s long list of multi-level marketing companies. On the other hand, eXp offers MLM-like compensation in the form of “revenue sharing.” This explains why some people consider eXp Realty as an MLM company.
An MLM company is composed of three parts. First, the MLM company must sell a product or service. Second, the MLM distributors profit from the sale of the company’s product or service.
Finally, distributors can earn money by recruiting other distributors to sell the same product or service. The compensation plan of each MLM company is different.
Let’s imagine a triangle. Because everyone in the triangle is in your direct downline (in an MLM, the people beneath you are known as your “downline,” and you are their “upline”), you will earn commissions from everyone in the triangle if the person at the top recruits ten people, and each of these ten recruits ten more.
If you can bring in just 10 people, you’ll make $1100.
Most people in your MLM would rather earn a lifetime passive income from recruiting others than a one-time commission from selling products, even if your MLM offers a wide range of products.
Due to the way the money flows, those at the top of the triangle have the most financial success, while those at the base have the least.
Having a large number of people in one’s “downline” is essential for success in a multi-level marketing company, and unfortunately, this is also true for the agents working at eXp Realty.
How Does Revenue Sharing Work?
The agents and brokers of eXp Realty are compensated in the form of “revenue sharing”.
Revenue sharing is the distribution of revenue, i.e., the total amount of revenue generated by the sale of goods and services, among the participants or contributors.
With revenue sharing, eXp Realty does not have to spend nearly as much money on marketing and hiring employees to fuel its growth as a traditional company would.
Instead, current employees or contractors are compensated based on their contribution to the company’s growth.
It is not the same as profit shares. In profit shares, the money that remains after deducting costs is divided.
eXp Realty is able to share revenue with its brokers because the company has significantly reduced its overhead costs compared to a traditional real estate broker. The company accomplishes this by eliminating brick-and-mortar offices paid for by the company and housing all support and training in a virtual office known as eXp World.
There are no regions or franchises to sell or pay for because there is only one eXp Realty and it is not a franchise. The eXp Realty agents then receive a portion of the cost savings, which helps the company grow.
This is how eXp Realty’s revenue share works. When you recruit a new broker, you get a percentage of the money that broker brings in as long as you and the new broker work for the company.
You also receive a portion of the money when that broker recruits another broker who brings in sales for the company. This benefit is available for seven generations, also known as tiers.
Is eXp Realty A Pyramid Scheme?
eXp Realty is not a pyramid scheme, though some people consider it an MLM. It is a legit real estate brokerage where agents can earn money by offering services to buy and sell real estate to their clients.
In contrast, a pyramid scheme recruits members by promising them money or services in return for recruiting others. It is unsustainable and often a scam because members at the bottom end are doomed to lose money.
Those who want to join must pay a membership fee to the company that runs the pyramid scheme. The company would share a portion of the funds raised from each additional member they recruit as a reward.
However, the scam is profitable only for the directors of the company, i.e., those at the top of the pyramid, since they can receive a portion of the payments from every newly recruited member. The scheme continues as long as members recruit and funnel money to the top of the pyramid.
Such companies almost never sell valuable goods or services. The scam’s only source of revenue is from recruiting new members and soliciting more money from current members.
A pyramid scheme would have to grow infinitely to make money for everyone who participates. This is impossible due to the finite population of the planet.
The scam will fail if there are no new recruits and other sources of income. Since the majority of members are at the lowest level of the pyramid, most of them will lose their money.
A good example of pyramid schemes is Vemma, a producer of energy and weight loss drinks. The FTC accused Vemma of operating a pyramid scheme in August 2015 that paid more to recruit new members than to sell products.
New members, who were typically college students and other young people promised high compensation, were required to pay $600 for starter packages and hundreds more for monthly products. According to the FTC, the majority of participants lost money.
eXp Realty Compensation Plan
The incomes in the eXp Realty compensation plan are as follows:
eXp reality pays a straight commission of 80% to the agent who closed the deal. The remaining 20% is paid to eXp reality, with some of it used to pay commissions to agents higher up the chain.
When an agent sells $16,000 in goods or services, he or she receives 100% of the proceeds.
They will then be charged $250 for each transaction until they reach $5,000, at which point the transaction fee will be reduced to $75.
As a result, transaction fees are reduced from 20% to $250, and they remain at $75 as the total sales amount increases.
Agents can bring in new agents in order to profit from the sales made by those new agents.
Tier 1 (downline level 1) is for agents who brought themselves into the company. Tier 1 agents recruit tier 2 agents.
FLQA are active Frontline Qualifying Agents who have made at least one sale in the last six months.
You receive 3.5 percent of the total amount when your tier-1 agents sell something through eXp Realty.
For example, if you hired John and he made a $10,000 sale, your commission would be 3.5 percent of that, or $350.
Agents must meet the FLQA requirements to receive both the eXpansion share commission and the eXpotential share commission. If an agent fails to meet the FLQA requirements, they are only given eXpansion share.
For example, if you want to earn a total of 4% (0.2 percent eXpansion plus 3.8 percent eXpotential) from a deal made by tier-2 agent Mary, you’ll need 5 to 9 FLAQ in your downline. If you don’t, you’ll only get 0.2 percent of Mary’s sales, which isn’t much.
6 Reasons Why You Should Not Work For eXp Realty
1. The Good Reviews are Written by eXp Realty’s Agents
You have probably found some other reviews of eXp Realty, and most of them are saying good words. But the authors are actually eXp Realty agents who want to recruit you as their downlines so they can get more commissions when you make sales for eXp Realty.
Therefore, their words are often biased and not trustworthy.
These reviews are simply sales pages and tell you nothing about the hidden costs and difficulties of actually making money as a real estate agent.
Would you trust someone who has a conflict of interest and recommends eXp Realty to expand their sales team? Probably no. They are not reviewing, but selling!
Therefore, I recommend reading the reviews of those written by the non-affiliates of eXp Realty.
2. Very Few People Can Make Money With eXp Realty
Success is difficult to achieve with a real estate brokerage like eXp Realty.
Your earnings are based on the number of transactions that you have during each month. But real estate is not one of those businesses where you can generate a lot of repeat customers. Most people you will be working with are planning on either buying or selling a home with your services and nothing else.
As a result, most agents at eXp Realty only focus on recruiting new agents to the company, instead of selling properties.
As a result, many MLM members lose a significant amount of money before even recruiting one person into the company.
If you want to work as a real estate agent, it’s helpful to build up a savings fund so you can pay your bills during slow months. Then replenish the account when you take in more money so that you are always on top of your financial situation.
3. eXp Realty Works Like An MLM
Some people have benefited financially by joining a network marketing/MLM company. Unfortunately, most people who join MLMs are left with nothing but regret and a lot of useless products that they were unable to sell.
Although eXp Realty is not necessarily an MLM, it works like one. The distribution of commissions is skewed upward.
The majority of those in the top tier and pioneers make the most money, while those at the bottom will not even earn a living.
As a result, many people do not consider eXp Realty to be a good career opportunity.
4. Exaggerated Claims Of Income
eXp Realty, like any other MLM company, makes exaggerated income claims, but in reality, very few people make a good living by promoting eXp Realty.
eXp agents use the misleading headlines “Join my team and get a million leads” to get agents into their downline. There are a few eXp Realty agents in MA, who do this. Their “team” is really just their downline where these agents work independently and get a referral fee when they close one of the leads.
5. Recruiting is Required To Succeed
I don’t recommend MLMs to people for this reason. eXp Realty agents put a lot of effort into recruiting. Eight out of ten ways to earn money with eXp Realty require recruiting. If you don’t recruit, you won’t earn a living.
In fact, eXp Realty has created a culture where people are masterminding or going to conferences to just recruit. This is the conversation you can overhear… “Hi, I am Peter… Tell me about your business… Here is an eXp Realty Application.”
My #1 recommended platform is different. You can make a 4-figure, 5-figure or even 6-figure passive income by promoting and selling products you truly like. You don’t have to recruit people but recommend useful and great products. I will tell you more at the end of this eXp Realty review.
6. No Standard Office
The difference between a traditional brokerage office and eXp Realty Negative is that there are no brick-and-mortar offices.
Not having a standard office can be difficult. Agents have to look for additional office space themselves. So the cost of the new office space had to be borne by themselves.
How eXp Realty works for all back office and business management is through Skyslope. It’s not a groundbreaking thing. But you need to spend time learning the software.
How Much Does It Cost To Join eXp Realty MLM?
To become an eXp Realty Agent, you must pay a one-time fee of $149 as well as $85 monthly fee.
Each agent must pay a broker review fee of $25 per transaction and a risk management fee of $40 per transaction, up to a maximum of $500.
eXp Realty provides training and virtual tools to its agents in exchange for the fees it charges.
eXp Realty Feedbacks By Their Agents
- If you’ve always wanted to be a real estate agent, this is your chance.
- A company’s stock can be purchased.
- A “unique” multi-level marketing company
- You might not be able to make any money.
- Monthly expenses
- You’ll need a large number of customers.
- Commissions are split 80/20.
- It can be overwhelming; it is not suitable for beginners.
Is eXp Realty MLM a Scam?
eXp Realty is a not scam. It is a legit real estate brokerage firm. A scam is defined as “a dishonest scheme; a fraud” by the Oxford Living Dictionary.
However, it is extremely difficult to make money working as an eXp Realty agent.
Most new eXp Realty agents take between 3 and 6 months before closing their first real estate sale. In some communities where competition in this industry is fierce, it can take even longer.
This means that you should have at least two years of savings when you start this career to ensure that you have a sufficient financial safety net. Many people think that this job is like any other employment opportunity, but it is more like starting a new business.
Many real estate agents have to work beyond the typical daily schedule because many of their meetings must be held in the evening or on weekends. This means you have to give up some of the family time that other people have on weekends.
If you are not willing to put in the hustle of work every day to ensure that sales can occur, then it will not take long for you to start looking for another career option.
My #1 recommended platform, however, has seen a lot of beginners earn four figures a month after joining it for a year and gradually achieve financial freedom.
I will tell more about my #1 recommended platform at the end of this review.
Final Verdict: eXp Realty Review
Here comes the conclusion of my eXp Realty review. Overall, I don’t recommend joining eXp Realty to make money.
You will have a tough time in the beginning when you are prospecting and trying to sell your first property and recruit new agents to contribute to your eXp Realty commission.
The worst part is that you practically have to ask your family and friends to join your eXp Realty career opportunity. It’s not fun.
eXp Realty is an MLM-like company where people often feel pressured to succeed, and this is one of the main reasons why most brokers leave the company.
Why not consider starting your own online business if you want to earn money and have a flexible schedule?
Thus, you can choose what you want to promote rather than having someone tell you what you must promote.
Let me tell you how to build an online business in a legit way to make passive income online in the next section. This has allowed me to make a full-time income in a year. Most importantly, unlike MLM models, It’s 100% legit and sustainable.
Best Alternative To Joining eXp Realty
If you’re beginning your online business journey, you deserve a program much better than joining eXp Realty as an agent.
My #1 recommended platform is called Wealthy Affiliate.
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But How Much Can You Earn with Wealthy Affiliate?
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Compared with Authority Hacker, Wealthy Affiliate has a much longer history, which has been established for 15 years and there are many success stories in the past decade. Actually, Wealthy Affiliate has more than a million members so far, so you can see how popular this platform is.
To give you more examples, here are some of the other inspiring success stories of Wealthy Affiliate members.
Where to Join Wealthy Affiliate?
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