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How Can EXPI Give So Much?
Simple. EXPI has centralized administration and no physical offices. It’s all done in a virtual world created by Virbela (now owned by EXPI).
No physical offices and centralized administration cut significant costs. EXPI passes those savings to the agent.
Another contributing factor is agent acquisition cost. Competitors like Compass pay top dollar to sign top producing agents. EXPI pays zero upfront!
Not only is zero capex growth good for EXPI, it’s good for the agent. Getting a windfall of money generally leads to what Bono, singer of U2, called “Moving House”
EXPI Is Not A Pyramid Scheme or Illegal MLM
According to the FTC, a pyramid scheme “compels individuals who wish to join to make a payment.”
Yes, eXp compels individuals who wish to join to make a $149 start up fee. Afterwards, eXp compels agents to pay $85/ month to use their platform. But does that mean they are a pyramid scheme?
I mean Costco compels individuals who wish to join to make a $60 or $120 payment (which is paid yearly). Is Costco a pyramid scheme?
No. That membership fee subsidizes Costco’s pricing. The fee incentivizes members to be repeat customers. There is value in that payment.
There is value in EXPI’s payment as well. One has access to kvCORE CRM, which normally costs individual agents $300-499/month. Website creation is included. Automated call/text/email is included. And an extraordinary amount of educational content is available 24/7, unlike brick and mortar brokerages.
But accusers then point out that eXp “promises its new members a share of the money taken from every additional member that they recruit”. That is a sure sign this is a pyramid scheme, right?
By itself, no. eXp does promise its members a share of the money generated by each additional member that they recruit. The “down line” goes 7 levels. But the agent has to perform (close sales) to get money to go up stream. That caps at $8k/agent/yr, so exp paying out up to ½ its commission split.
That brings me to my next point: pyramid schemes seldom involve sales of products or services with value.
Real estate agents have been providing a useful service for over 100 years. Home sales is a tricky process. Homes are most people’s biggest asset. The experience is so infrequent for most, that people can’t build the domain expertise to do it themselves. So help IS needed.
The people working for pyramid schemes try to promote the actual company instead of the product they are selling. Sure, there are people in eXp that focus solely on recruiting. But it’s a small fraction. And for anything to happen upstream, real estate transactions with the PUBLIC need to happen.
Think of it like this: a run-of-the-mill pyramid scheme is based on the number of people recruited and sales directly to the RECRUITED. Nothing is sold directly to the agent in EXPI. Money generated is based on transactions of sales with the PUBLIC.
Lastly, the vast majority in a pyramid scheme lose money. With EXPI, that is the opposite. Everyone makes more money than they did with previous brokers almost unanimously because of better splits.
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