A Paradigm Shift in Real Estate
Over the past 30 years, several Real Estate models have evolved and made a couple of significant paradigm shifts in the methods of doing business. At a minimum, most of the models out there have built and developed solid foundations, they have their success stories, growth and likely were profitable from their corporate positions. From this point forward, when I use the word ‘traditional', I will be referring to the pioneering business models that still continue to be the norm for many market centers today. The ‘traditional' models (in my opinion), are considered to be either Dependent or Independent business Models. For many years, the traditional real estate companies were strategically Broker Branded, in that the agents of these traditional companies were controlled somewhat by management and the agents helped pay for management salaries with their Low Risk/Low Take commission plans. Then in the 1980's when society was seeking thier own independence, entrepreneurial growth escalated exponentially. Everyone was becoming an Independent broker within their area of interest or expertise. The independent boom hit America in a big way. The boom included every form of service becoming an independent opportunity with real estate being no exception to the times. The 100% real estate companies were perfectly suited for those seeking their own identity and freedom to earn more income. The 100% companies naturally attracted the entrepreneurial leaders/managers/brokers and top producers away from the traditional companies. A Paradigm shift from the ‘traditional' dependent model shifted towards an Independent model of real estate in the 80's and 90's, whereby Agents had the opportunities to brand their own names. The Independent models shifted a large population of top producers to the 100% type companies. RE/MAX was not the first, yet one of the most successful independent companies that flourished during the 80's and 90's. Agents didn't have to pay for things they didn't use and they developed somewhat of a Landlord/Tenant relationship with their company in order to receive almost 100% compensation. In other words, these agents paid to go to work and sell real estate. When we look a little closer at those two styles from purely compensation point of view: the net compensation for both the traditional and independent models are approximately 67% when utilizing the National Income Averages of agents with 100% companies and paying an average amount of $1,200 monthly desk fees compared with the same or very similar in the traditional 50/50 models. Today, most top producers in the so-called 100% models have a hard time justifying the value of writing a monthly rent check to earn the privilege of retaining 95 to 99% of the commission. Most Top Producers in the industry have established their own brand, typically associated with their name, their influence, their performance and their tradition. Generally speaking most agents earning over $100,000 annually leave between 20 and 30,000 company dollars annually on the table regardless of what company they hang their hat with. The company dollars left on the table were either in the form of a desk fees, rent, reduced split, transaction fees, and/or what ever fee the brokers or managers could sell or rationalize to their agents.
I started with a 100% company who still claims to sell more real estate than anyone else. I also felt that the monthly desk fee or rent really didn't have a value proposition to me other than being completely associated with the highest gross compensation model available at the time. Being associated with the #1 company felt good, however over the years, I never had anyone walk in the door looking for anyone associated with the company. I generated my own leads, my own people as do most every other agent in the industry. As a confident entrepreneur, I obviously preferred being an independent agent at the time versus being dependent on a company brand, but those were my only two legitimate. Over the years, I began to realize even more that the consumers really do not call the real estate brokerage without knowing who the real estate professional was. Think about that for a moment! If there were a giant fish bowl full of business cards from the # 1 selling real estate company in the world and you were forced to settle with the one card you pulled out of the bowl; what are the odds of have a positive experience??? Consumers are interviewing more today and determining what value proposition the agent brings to the consumer. They are asking questions like; 'What are you going to do differnetly and or better than the average agent when it comes time to sell our home?'.... Ahhhhh??? I have a website? I'll put it on the mls? I'll create fancy colorful brochures? I'll do a few opens? I'll even pay for a few ads in the newspaper!!! Wupdeedoo!!!
Furthermore, it seemed to me that it was less important being associated with a company holding a larger market share when meeting with consumers and selling our marketing plan. Today, marketing their home beyond the traditional platforms is even more important than having the larger market share based purely on vast populations of agents. Consumers want to know what agents will do in helping them develop the most equity in their real estate transactions. Establishing a track record, history and testimonials are the reasons people consider us to be their real estate professional. Year after year, agents review their business plans and review their lives in general. For several years, I struggled with the fact that I was seeking independence, wanted to move away from a comfortable teaching salary/job, and yet, I also realized that there was connection missing with my seemingly successful business and our clients. I felt something was missing in our place of doing business. I also realized that when I stop, slow down or take any time off; the revenue reciprocated in the same way.
Over the years, I disliked paying desk fees even more without a value proposition attached to my personal and business development. More importantly, I felt I was in business for myself and by myself. I continued to say to myself; "it is what it is, it was the same when I signed up and it will likely continue to be the same". I was in business for myself and by myself. The best I could ever do when I went to work each day was 99% less the desk fees and that netted me approximately 67-77% leaving an average of $24,000 to the house on an average year. In fact, I remember paying for a Top Producers training and coaching event with one year and the seminar opened with an introductory session that involved everyone standing up on cue and were told to congratulate each other because we are the only real estate professionals who actually pay to go to work. Give yourself a pat on the back! I thought to myself at the time, how crazy is that? I also realized I paid dearly for not going to work? In fact, whenever we took family vacations, I always felt un-settled while on vacation. Should we get back to work sooner? Should we bring some work along? Whenever we would come back from vacation, we knew we would be staring at more desk fees and felt we had to jump on a speeding treadmill to catch up for time lost.
Then along came an new brand of real estate to Minnesota. They dubbed themselves as an Interdependent brand whereby real estate agents have an interdependent relationship with the company's growth and have an opportunity to earn and share company profits. In fact, I was so compelled with the story that I recruited several other top producers from my former 100% office to take a look at this exciting new Interdependent brand of real estate that shares its profits in a 7 level multi-level format. Myself and seven other top producers jumped onto a plane to Austin Texas for training to launch a Kellar William Franchise in Minnesota. Their story seemed very compelling from both agent and a brokers perspectives. Wow, this is what agents want in the new millennium, their seeking value, networking, training, support, technology and agents have an opportunity to receive some of the profits if they help the company grow. Unfortunately, after I returned from Launch in Austin, I decided to step back and look at the model from both ownership level and from an agents perspective. I focused on the profit sharing model from the agent perspective and realized the actual story became less compelling from a residual/compensation standpoint. I realized that many factors really needed to be in place each month in order to receive any profit sharing with their multi-level sponsorship model. Much of the energy and enthusiasm I experienced when I originally heard the story focused on the residual income opportunities that makes many people consider this as another income stream, another opportunity to slow down and/or retire someday with continued income streams to support our lifestyles. I quickly realized, I would need to have huge numbers of recruits immediately down line to receive any significant profit sharing, if and only if the office was profitable in that given month. Again, the bottom line for me was leaving about $26,000 to the house annually, no real net differences, an opportunity to receive a few bumps that might pay for a dinner or two and some great synergy, support, and training opportunities. It seemed like something I was seeking, however needless to say, I left the ownership group, wished them well and returned to my former Desk Fee Company seeking other opportunities including going completely independent and on my own. By the way, the owners are growing very well, they are profitable and they will continue to grow... No regrets on my part!
Then this EXIT thing came to Minnesota. A pilot and a Lakeshore guy looked more globally at the real estate industry and discovered an exponential growth taking place across everywhere in the nation and was yet to be introduced to Minnesota. On a leap of faith, Alan Dirks and Tim Lovett (Mr. Lakeshore) decided to bring a yet another interdependent model of real estate to the very traditional state of Minnesota. After hearing the EXIT story, Bonnie (my wife) and I realized this must be it. A real opportunity to earn more than 100% with no desk fees and we could be in business for ourselves and yet never by ourselves. I had to look into this with more diligence and scrutiny than the last time. I played the devil's advocate in every sense of the matter. The story was so very compelling from both agent and broker perspectives. The EXIT systems, training, networking and support models in place were virtually bullet proof. EXIT Realty is designed to enhance the associate's personal development and wealth which is all intrinsically related to helping everyone in the company improve their personal position in life. We always realized we were looking for more training, technology and support and yet we never realized and are now experiencing the real opportunity to earn more than 100%, have retirement options as well as benefits associated with the loss of a love one. A very compelling story in itself and it will likely be partially mirrored by several companies who might not be so entrenched into their corporate structure. Since EXIT's growth to over 40,000 associates, almost every other company has developed varying compensation split options, desk fee options as well as no desk fee options to either recruit, but more importantly, they are barely maintaining their existing agent populations. Only EXIT Realty offered us all the pieces we were seeking including the most important pieces: Training, Support, Technology and the spirit of sharing revenue. EXIT Realty is an empathy oriented company offering every associate the option to develop their personal wealth building strategies, retirement options and benefits through their real estate transactions and referrals.
Wow, a real opportunity to share revenue rather than profits with the company. No smoke screens about profitability. No multi-level marketing, no desk fees, purely the highest net splits in the industry, plus single level sponsoring bonuses equivalent to 10% of the gross commissions earned by anybody we introduce to the company for as long as we both stay with EXIT. In other words, if I simply introduce 2 agents per year that earn only $60k per year, after 5 years I will have received approximately $170,000 residually. That is significantly more than 5 years times 20-30,000 company dollars. I don't have to sell EXIT, I simply tell the story. More importantly, I can confidently say EXIT has the best training, networking, support-systems for agents, brokers, managers and administrators in place and the vast majority of the training is FREE, I love FREE. Agents, brokers and assistants all have an equal opportunity to supplement their personal and professional development and supplement their income streams with additional revenue options.
Changing companies was not something that came easy for me personally, particularly when I first heard the word EXIT. I almost walked away from the presentation because of the word EXIT. How crazy is that when you think about it for a moment. What would Coldwell Banker, RE/MAX, Edina, Keller Williams, GMAC mean or sound like to me when they were first introduced? Am I working for a bank, a city, or a car loan company? Then I was asked to look at the word 'EXIT' purely from a real estate perspective. By definition alone, EXIT is the most real estate appropriate word. Both buyers and sellers are making a safe EXIT from one place to another. Isn't that why they put EXIT signs above every corporate door in the world so people can make a safe passage from one place to another in case of an emergency. Better yet, all the current red EXIT signs above every corporate door in America will have to be changed to green EXIT signs because red means stop and green means go to most people including the little one's who can barely read. EXIT is the most advertised word in the world, it's on every roadway, off ramp, computer, airplane, public and corporate door in the world and very soon, the word EXIT will have real estate associated to everyone as well. Thinking about change comes from a conditioned response to do better at what you are currently doing. Insanity is the conditioned response to continue doing the same thing over and over while expecting a different result. I find that very important when talking with other agents about EXIT Realty. When talking with other agents, many of them are open-minded about their career. I generally listen to what they say about their real estate business and treat them as associates rather than competitors in the industry. It makes zero sense trying to influence someone to drive a more fuel efficient car when they need to pull a trailer, boat or camper with their vehicle on a regular basis. When I first joined EXIT Realty, I thought everyone should be driving a more fuel efficient vehicle and EXIT was the answer for everyone. Over the years, I have realized that EXIT Realty is really for those forward thinking associates wanting to develop their personal wealth and their personal development through their real estate transactions, offering retirement options and death benefit options for their families.
I can confidently say are blessed with a great group of leaders at EXIT Realty, namely Steve Morris, the founder of EXIT Realty and Tami Bonnell the President of EXIT Realty Corp. USA. Both are very influential people on the regional and national levels, formerly with RE/MAX and now leading EXIT with the quickest exponential growth in the history of Time. Tami and Steve are the most personable people and positive role models in our company and industry. Our entire company is dedicated and partnered with Habitat for Humanity. In my very brief time with EXIT, I've become more knowledgeable about the industry with the local, regional and national support. I've become a better real estate agent in both service and of course compensation and finally; I can confidently say that I do earn more than 100% with the continued stream of sponsoring residuals from EXIT as I introduce other agents to any of our 1200+ franchises across Canada and the United States. By the end of 2007 EXIT Realty will be near 50,000 associates and growing. At this rate, the top self-proclaiming 100% company will then be #2 by end of 2010.
Whether the timing is right or not, "it is all about the company you keep!"
Best Regards and may your year be blessed with double-enders!
Frank D'Angelo -Broker/SRS 
http://www.careerswithexit.info/ (The EXIT Story & Opportunity)
http://www.ActiveRain.com/metrobroker (Our Preferred Blog Site)
http://www.allmetrohomes.com/ (Our Personal Website)
Frank D'Angelo Minneapolis MN Broker/Owner
EXIT REALTY NEXUS of Minneapolis, MN
(763) 548-1444
