eXp Realty is a real estate brokerage company that adopts the Multi-Level Marketing (MLM) business model to sell real properties and recruit agents.
It is common for people to refer to an mlm company as a pyramid scheme.
But, is eXp Realty a pyramid scheme?
We have talked about this in our discussion on MLM vs. Affiliate Marketing. We acknowledge that not all mlms are a pyramid scheme.
However, it’s not easy to differentiate between an mlm and a pyramid scheme.
We all agree that a pyramid scheme is a scam, not a real business opportunity.
So, before you are signing up with eXp Realty, you might want to read this eXp Realty review. We are going to analyze this mlm business structure to determine if eXp Realty really a pyramid scheme.
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eXp Realty Review Summary
Business Opportunity: MLM
Initial Investments: $149 & $85/month
Annual Revenue: $267 Million
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What Is eXp Realty?
eXp Realty is a virtual real estate brokerage company that offers agents multiple options to make money, besides selling real properties.
eXp Realty agents now can make money on the sales generated by their own recruits.
eXp Realty is the first real estate company to use the mlm compensation plan to reward and recruit agents.
The company opened its first real estate office in 2009. By 2019, eXp Realty has enrolled over 20,000 active agents with the Q2 revenue of $267 million.
The success of eXp Realty might not translate into business success for agents. The company doesn’t offer an income disclosure statement, which makes it very difficult to evaluate the agents’ actual income.
I suggest you compare eXp Realty with other home-based business opportunities before investing.
You can use My #1 Business Opportunity to make a comparison.
How To Join eXp Realty?
You will need an agent to sponsor you to join eXp Realty. This is the special element of an mlm business.
You can easily find an agent online or visit the eXp Realty website to request a local agent.
There are fees associated with being an eXp Realty agent. I will discuss all the fees in the following section of this eXp Realty review.
First, I want to talk about the licensing requirement. You will need a real estate license to earn commissions from real estate sales.
You are not required to have a license to join eXp Realty. You must be willing to get licensed after joining the company. This means you have to take classes and sit for the licensing exam in the state that you plan to become a real estate agent.
How Much Does It Cost to Join eXp Realty?
Here are the costs to join eXp Realty:
- $149 initial registration fee, which the company calls the start-up fee.
- $85 per month virtual office fee. This is the Cloud Brokerage fee.
- $25 brokerage review fee per transaction.
- $40 risk management fee per transaction which caps at $500.
As you can see, it is not entirely free to become an eXp Realty agent. You still have to pay the monthly brokerage fee similar to the traditional real estate brokerage firm.
The fees above do not include your real estate agent licensing fees. Licensing fees vary for each state. You should contact your state licensing agency to get the exact number.
Then there are also expenses related to running your own real estate sales business which includes marketing materials, travel expenses, phone, and internet services.
Before you can make a sale and earn a commission, you must come up with a good junk of cash to invest in this mlm business.
Every start-up requires initial capital investment. However, the question is: “can I recoup my investments as an eXp Realty agent?” The best way to find the answer is to evaluate the eXp Realty compensation plan.
Let me tell you why I will never join eXp Realty. I hate the licensing exam. You don’t need a license to make a lot of money online. If you are looking to start a virtual business, I suggest you check my #1 Online Business Opportunity to see how much I make per month.
eXp Realty Compensation Plan Review
eXp Realty doesn’t publish a full compensation plan like other mlm companies.
The company doesn’t need to create a detail compensation plan because it uses a simple unilevel compensation structure. Everyone you recruit goes under you, and every person your team members recruit goes under them.
You have two options to make money with eXp Realty: earn commissions from the sale of real property and earn override commissions on your team sales activities.
Personal sales commissions are paid after the transaction completed. Team sales commissions are not paid unless you are qualified.
Below is a brief explanation of the eXp Realty compensation plan.
Make Money Selling Real Estate
eXp Realty offers agents a starting commission of 80/20 split. This split is capped at $16,000. After the agent has reached the cap, the commission payout is 100%, and eXp Realty charges a transaction fee up to $250.
Here’s how this compensation plan works:
You sold a house with $5,000 gross commission:
- Less 20% to eXp Realty ($5,000 – $1,000 = $4,000)
- Less 50% of broker review fee, max at $25 ($4,000 – $12.50 = $3,987.50)
- Less 50% of the risk management fee, max at $40 ($3,987.50 – $20 = $3,967.50)
- Your take home commission = $3,967.50
Using the same example above, but this time you have reach the $16,00 caps. Here’s your commission on the $5,000 gross commission:
- No 20% split
- Less 50% of capped transaction fee of $250 ($5,000 – $125 = $4,875)
- Less 50% of broker review fee, max at $25 ($4,875 – $12.50 = $4,862.50)
- Less 50% of the risk management fee, max at $40 ($4,862.50 – $20 = $4,842.50)
- Your commission = $4,842.50
The next commission that we are going to discuss in this eXp Realty review is the override commissions. This is new to the real estate industry.
Team commission structure makes eXp Realty an mlm opportunity.
Make Money Recruiting Others to Join EXp Realty
First, not every agent qualifies for the override commission. You must be a qualified agent.
OK, let talk about the qualification requirements and how much you can make money on recruiting others to join your eXp Realty team.
eXp Realty calls the override commissions as ‘Revenue Share Plan.’
According to the plan above, you can make between 1% to 5% override commission up to 7 levels.
The override commissions are calculated using the Adjusted Gross Commission Income received by eXp Realty (AGCI).
Using the $5,000 gross team sale commission to illustrate how your override commission is calculated.
- Assume you are qualified as a Tier 2 agent, and the property was sold by a team member that has not reached the $16,000 cap.
- eXp Realty receives $1,000 from the 80/20 split. This is AGCI.
- Your override commission as a Tier 2 agent is 4% (0.2% eXpansion share + 3.8% eXponential share).
- Your override commission for this sale is $40 ($1,000 x 4%)
What happens if the sale was made by a cap team member?
Well, you earn no override commission, because eXp Realty does not share any commission with cap agents. (After an agent reached the $16,000 commission cap, the payout is 100%).
The Revenue Share Plan looks impressive. But when we analyze the details, we realize that you can potentially earn ZERO override commission.
So, this is not really a residual income as promoted by eXp Realty. The only way to earn override commission is by recruiting more new agents, those that produce less than the $16,000 commission cap.
eXp Realty uses the Revenue Share Plan as a way to encourage agents recruiting others to join the company. The more people joining your team, the more money you make. This sounds like a pyramid scheme.
One big difference between an eXp Realty recruiting scheme and a pyramid scheme is that you make money on the sales activity of downline agents, not based on recruiting activity.
Can You Make Money with eXp Realty?
After looking at the eXp Realty compensation plan, I can say yes you can make money as an eXp Realty agent. But it is not easy.
I don’t see any big business advantage between eXp Realty and traditional real estate brokerage companies.
Yes, eXp Realty offers a better commission split. But only if you can make sales. If you are a million dollars producer, you can demand a better commission split with any real estate brokerage firm. This is a known fact in the real estate industry.
eXp Realty promotes its business model as a no desk fee brokerage company. This is very misleading. The company does charge an $85 monthly Cloud Brokerage Fee. This is your desk fee. It is not free.
The majority of people joining eXp Realty with the hope to make money building a big team, earning from your downline. This is the attractive feature of mlm opportunity.
But it is not easy to make money building a team with eXp Realty. This is not a viable option because your enrollees must meet certain qualifications for you to earn override commissions.
So, for those joining eXp Realty hoping to cash in the team-building phenomenon, I have to tell you that you will not make money with eXp Realty this way.
Your best chance of making money with eXp Realty is selling real estate. Even then you should ask yourself this, ‘Do you want to join a company that offers not local marketing support?’
Traditional real estate brokerage firms have a strong presence in the local real estate market. They can help provide more sales leads for new agents.
Is eXp Realty A Scam?
No, eXp Realty is not a scam. This is a business opportunity.
The risk of starting a real estate business is earning nothing and losing all your investments. It is your responsibility to research, study, and investigate eXp Realty before joining.
Reading eXp Realty Reviews is one way to learn the risks and rewards associated with this home-based business opportunity.
As an Online Business Review site, I have evaluated hundreds of mlm opportunities to help investors identified and discover the right opportunity to make money from home.
This mlm opportunity might not be a good investment for you, but eXp Realty is not a scam.
Is eXp Realty A Pyramid Scheme?
I have to say that eXp Realty is promoting a pyramid scheme. However, the business operation is not a pyramid scheme.
eXp Realty promotes itself as a future real brokerage that allows agents to make money building a real estate team worldwide. This is done by recruiting others to join your eXp Realty team.
The idea of building a future stream of income-generating from the override commissions is the hot-selling point for eXp Realty mlm opportunity. Almost everyone joins the company hoping to cash in on this new idea.
But after reviewing the eXp Realty compensation plan, it appears that building a big team doesn’t necessarily mean making a lot of money. You only earn override commissions on qualified real estate transactions.
eXp Realty uses team building as a marketing strategy to encourage agents to recruit and promote the company mlm business model. It is not a way for you to earn income as a real estate agent. This to me is promoting a pyramid scheme.
Is eXp Realty Worth It?
This is not a good mlm opportunity. eXp Realty is not worth to invest your time if you are planning to make money recruiting others to join.
However, for those looking to become a real estate agent. This opportunity is similar to traditional real estate brokerage firms. You have to sell real property to make money.
When you are joining eXp Realty and thinking you will get rich recruiting people into your team, you are making a big mistake.
The truth is, eXp Realty is selling you the hopes and dreams, not a real business opportunity.
Let me ask you this,
Do you know why you want to start a home-based business?
To earn extra money from home, to be your own boss, or to achieve financial freedom?
And to make money, we invest in a PROFITABLE business!
As an affiliate marketer, there’s NO traveling around town to attend late-night meetings and NO face-to-face sales or recruits.
The best part, you are working on the computer in your own home or anywhere you like.
Affiliate marketing is one of the most powerful work from home business opportunity to earn passive income. I recommend you read, MLM vs. Affiliate Marketing to learn.
Another problem that I like to discuss with you in this eXp Realty review is this: What happens if eXp Realty goes out of business or ban you from its cloud platform?
You are out of business! You lose everything and nothing you can do about it. This is the biggest business risk when investing with an mlm opportunity. You have no control of your own business.
Look, you start a business to build long-term incomes.
You want to create a system that generates money far into the future. Isn’t this the #1 reason you work hard to build a successful business?
If you want to be an owner of a lucrative and profitable business that generates six-figure passive income, then…
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eXp Realty was launched using cloud technology and the mlm marketing model to attract people into joining the company.
The company brags about the 20,000 plus agents joining the company, but we don’t know how many of these agents make a good living as an eXp Realty agent.
If agents are making a good income, then eXp Realty will blast their earnings and success stories all over the internet. However, there is no financial information available on agents’ income, not even the income disclosure statement.
If you are excited and thinking you can get rich by recruiting a lot of people, then you will be disappointed.
There are other home-based business opportunities that do not require face-to-face selling or recruiting, such as my #1 choice: “Affiliate Marketing.” I suggest you investigate this home-based business opportunity before joining the eXp Realty mlm opportunity.
Yes, eXp Realty sounds exciting, but we are in business to make money.
I hope this eXp Realty review answers your question, is eXp Realty a pyramid scheme?
Until next time.
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