In 2006, eXp World Holdings CEO Glenn Sanford brought 184 people into his profit-sharing group at Keller Williams, a company that touts its lifetime profit-sharing model for agents, as a recruitment incentive.
“You would think that would be meaningful, but my 1099 in 2007 was about $6,000,” Sanford said. “For me, that didn’t work.”
Glenn Sanford
Sanford, who founded eXp Realty after leaving Keller Williams, used the lifetime profit-sharing model as one of the tenets of his virtual cloud real estate brokerage. On stage at Inman Connect in Las Vegas, he told Warburg Realty President Cecilia Warburg Peters that the equivalent at eXp would result in roughly $90,000 per year.
EXp Realty is able to save on marketing and recruitment costs because their agents act as the marketing. The incentive for them to bring in other agents act as the company’s investment in recruitment.
“For agents to actually leave a physical space, that’s painful for them too, so the incentives have to be high enough for them to actually make the move,” Sanford said.
Keller Williams CEO Gary Keller has previously called on current eXp Realty and former Keller Williams agents to give back their profit-sharing checks from Keller Williams. Some have even taken Keller up on it.
A select group of top earners at Keller Williams have even reportedly called for the company to end the practice of paying out lifetime profit-sharing checks to competitors.
One of the other reasons that eXp is able to keep costs down and give more of that company income back to real estate agents is because of their low operating costs.
Sanford founded eXp Realty, a virtual cloud real estate brokerage, he was partially inspired by Second Life, an avatar-based video game that was popular at the time.
Now, every day, Sanford said he puts on his furry slippers, goes to his office above the garage, opens his computer and logs into managing a publicly traded company with a $620 million market cap and more than 20,000 agents.
EXp Realty has no corporate offices, and despite that, Sanford said, it’s a major misconception that there’s no meaningful connect with agents and staff.
“The comment that I, time and time again, from Day 1, people forget, once they’re in there for 5-10 minutes, that they’re in their house,” Sanford said. “They literally forget where they’re physically at and only engage with the platform as if its a real place.”
Sanford said the virtual world obviously allows his company to reduce the cost of having a brick-and-mortar location, but also allows them to reduce staffing costs all while recruiting agents who want or need to work from home and still providing strong support.
“There’s a lot of really great talent that wants to work from home and needs to work from,” Sanford said. “There’s a lot of really great talent that can’t commute 30 mins to the office every day.”
Sanford said he believes that because of the company’s unique setup, it can leverage staff over a larger number of agents, all while providing top support and even meeting in person some times for that physical connection.
“They’re all locally centralized staff to support those markets, and there’s lot of meetings, and they go to trainings,” Sanford said. “It’s still hands-on, we just don’t have the physical space.”
“Our agents feel more supported in the eXp ecosystem than they did at their prior brick and mortar,” Sanford added.
Watch Glenn Sanford discuss his profit-share model onstage at Inman Connect Las Vegas.
