A look into what’s propelled the franchise’s significant growth and why its CEO has been recognized for her leadership.
- With 550 franchises in the U.S. and 40 in Canada, Exit Realty is best known for its recruiting bonus structure that's helped propel its significant growth.
- CEO Tami Bonnell, who has been recognized for her leadership and industry achievements, says the incentive fosters collaboration between new and experienced agents.
- Though recruiting incentives in general are nothing new, at Exit Realty the residual income helps its independent contractors with retirement.
When Tami Bonnell joined Exit Realty in 1999, she thought the real estate industry could be heading in the wrong direction.
What attracts many agents to the field — the competitive outlet and independence — has a flip side: burnout. Bonnell witnessed fatigue as the result of overwork and ego cultivated by islands of self-interest.
She was drawn to the more cooperative environment at Exit Realty Corp. (Exit), she says, which founder and chairman Steve Morris first opened in Toronto, Canada, as a full service franchisor in 1996.
With 550 franchises in the U.S. and 40 in Canada, Exit is best known for its bonus structure that pays 10 percent of new recruits’ closed transaction gross commissions to the agent that “sponsored” (or recruited) them into the company.
This formula is what’s propelled the franchise’s significant growth (in October alone, it’s expanded by 30 offices), landing both Morris and Bonnell on the 2016 Swanepoel Power 200 List.
Massachusetts-based Bonnell, who became the company’s CEO in 2012 after serving as president since 2001, has been instrumental in creating the company’s main programs.
She explains why she believes they work: “If you went to dinner and the waiter had a vested interest in the restaurant, how much better would the service be?”
Details of the franchisor formula
The way Bonnell and her management see it, their agents are the assets of the business.
At Exit, the type of results squeezed from a competitive atmosphere is somewhat replaced by the collaborative bonus incentive.
“The payment system has created a culture where we all want to help each other — brokers will call other brokers, agents other agents,” Bonnell said. “If they come across a new tech product that helps their business, they will talk about it with others.”
The money paid to the sponsor associate, which gets capped at $10,000 per recruit paid every year that the recruit stays with the company, comes from Exit’s head office and isn’t taken as a slice of the new agents’ earnings.
In a company blog post, Morris described his thinking as he started the franchise: “Could I take the concept of residuals from the outside world and bring it into the real estate industry whereby everyone in the corporation could get a piece of the action and we could create a future for real estate agents that never existed before?”
Comparable “skin in the game” franchise offerings include Keller Williams’ profit share, in which firms split owner profits with associates who are stakeholders each month, and eXp Realty’s revenue sharing program.
According to the Exit formula, commission splits are 70/30 to $100,000 and 90/10 for the balance of the year. Each office is independently owned and operated, and commission splits are determined at the franchise owner’s discretion.
Retirement, vacations, charity donations
Corporate recruiting bonuses are nothing new and still prevalent across industries, but real estate’s sometimes-sporadic commission income and the lack of benefits for independent contractors make Exit an interesting case study, especially when it comes to post-career savings.
For agents who retire or take a break from real estate, their 10 percent sponsoring bonuses convert to 7 percent retirement residuals and 5 percent beneficiaries benefits, Bonnell said.
There’s no limit to the number of associates an agent can recruit, and the deal applies to recruits across the nation at any Exit office.
And although many real estate brokers are scratching their heads figuring out a system to help retiring agents without losing them altogether, Exit’s residual income comes into play.
“We teach baby boomers how to retire twice,” Bonnell said.
Retiring associates can sell their book of business — which Exit values on a case-by-case basis — and then receive a residual after-the-fact from Exit based on the people they’ve introduced into the company. The residual income is deposited into an associate’s “Exit Success Card.”
A lot of baby boomers use this card to go on vacation.
Bonnell added: “It’s like an equity line of credit that they never have to pay back. We have people who have traveled around the world on their card.”
The residual program appeals to millennials, too (said the mother of three herself), who also see value.
Some of them, in true millennial fashion, have even donated their residual income charity and, for example, bought orphanages.
Making the teamwork
Exit has its own training system for teams, which Bonnell felt was necessary given the fallout that the team model can sometimes cause.
The problem with teams, Bonnell says, in other systems is that the team leader spends a lot of time coaching and mentoring fellow members. Then, if the members choose to break away and develop their own business or team, the leader receives nothing for that effort.
“You can’t have a team that demands so much that it takes away from the profitability of the brokerage, but at the same time, the team wants the freedom to grow,” she said.
With the Exit system, if the team leader sponsors the team members, he or she continues to earn residual income after the team member breaks away — as long as they remain in the Exit system and close deals.
That’s how Bonnell believes the bonuses work to keep the team leader motivated and rewarded.
Team members also have the ability to sponsor, which keeps them “glued in” and helps with cash flow, she said.
On more women in senior leadership
Bonnell, who ranked as No. 55 in Swanepoel’s Most Influential 200 in Real Estate and in the Top 20 Most Influential Women in 2016, likes to shake things up in the real estate business in more way than one.
She was recently asked to join the National Association of Women in Real Estate Businesses’ (NAWRB) Diversity and Inclusion Leadership Council.
The speaker and trainer remembers the days when she was turned down for promotion simply because another candidate had a family to support — “well, this guy has to make a living,” she said.
Bonnell, who at NAWRB will be helping to raise the number of C-suite women, brings other women with her to the top of Exit Realty.
The executive team has more women than men, including the CEO, the COO, the female senior vice president and two female divisional presidents.
“We have more women in leadership than men because we went by skill set, not by gender,” said Bonnell.
“Women in leadership have got to do a better job of making sure we focus on diversity and inclusion.”
The more success stories senior women can share of how they got from point A to point B, the better, she added, because so many are concerned about raising their hand; they want to be perfect for a job before jumping in, and they have a lot of responsibilities.
“I think women are good at sales, but they are also good at management; they are good at multitasking and they are usually more empathetic,” she said.
Based just outside of Boston, Bonnell is not intimidated by the old boys’ network in real estate and hasn’t let it affect her.
“When I go on the road, a lot of guys stay on to play golf. I’m a mother and a grandmother. I go home.
“A lot of us have been exposed to that. I say: ‘Here are the cards that have been dealt. We want to shuffle the deck.’”
Exit’s growth story
After more than 17 years with the company (and 30 years in the industry), the CEO describes Exit’s current “rapid growth mode.”
The company is private and will not reveal its sales volume.
Between new franchises and acquisitions, it has expanded by 30 new offices so far in the U.S. and Canada this month.
Bonnell said she wants to snag one of the top three position for brands in the U.S. and Canada before expanding outside of North America.
The Exit formula works well when making acquisitions, too, she said:
“With the residual component, instead of paying a company outright, we can pay the owners residual income ongoing because they’ve sponsored their agents into Exit.”
Exit is currently looking for regional owners (sub-franchisors who own the rights to a geographical boundary, sell franchises within that boundary and help the brokers and agents to grow) for Ontario, Canada, Texas and California.
“We’re looking for true entrepreneurs who like to lead, people who have successfully built businesses so they in turn can teach others how to build theirs,” she said.
Why tech came late to real estate
To create a cohesive network, technology bonds Exit’s many offices.
Bonnell, a tech enthusiast, thinks tech came in later to real estate because people were afraid of losing control. In her case, the company’s tech systems give her more control and oversight.
Exit has proprietary tech systems that track every transaction. They have a digital system developed in conjunction with IBM developers designed to follow hundreds of thousands of agents and their transactions.
This lets leadership scan the strength of every office. “We know what they need to work on,” Bonnell said.
For example, if an agent has a lot of expireds, management knows he or she needs to do a better job with price reductions.
The company’s vice president of technology engagement also plays an important role because, as Bonnell puts it, “we want our people to actually use the tools we provide.”
“[The VP] teaches them in a no-judgement zone — so, regardless of their skill set, they are safe to learn and ask questions,” added Bonnell.
Meanwhile, the CEO is passionate about the value of demographic trends, and tech is helping her with that, too.
She sees being a good forecaster as a key part of her job as CEO, to stay ahead of the curve on business in every market and seize opportunities.
It ends with collaboration
Of course, it’s one thing to bring fresh associates on board — which, in an already-crowded industry, could attract some criticism for professionals concerned about the agent quality problem — and another entirely that new recruits find success in the business.
Bonnell says that one natural byproduct of sponsoring someone into the company is mentoring.
This system builds a collegial culture, a “you get better, we all get better — and financially benefit” environment.
“If I introduce somebody into the company, let’s say they are making $30,000 — if I teach them to increase their production to $100,000, I get better at my job,” she explained. “Other agents are likely to help the people I’ve sponsored, just as I will help the people they’ve sponsored.
“Doctors share information with other doctors, nurses share information with nurses — why don’t brokers and agents do the same thing?”