Categorized | eXp, News

Initiating Coverage With an Outperform Rating

The following is an excerpt from the William Blair Report on eXp World Holdings.

The Agent Compensation Model

We believe that eXp’s agent compensation model will help grow the number of agents committed to the platform, decrease attrition (but still leave room for management to get rid of the wrong agents if necessary), better align shareholders and agents (which should be good for the stock), and create a more durable model across cycles.

EXp has set up a capped commission structure with options for commissions and revenue share to be partly paid in equity. Furthermore, agents who refer other agents to the platform can earn more equity and “passive” income derived from revenue-share agreements from referred agents’ completed transactions.

Agents receive an 80/20 commission split on the ϐirst $80,000 in gross commission income (GCI) and 100% of the commission beyond $80,000 in GCI. We believe the average home sale price for an eXp agent is about $275,000, which implies the typical agent would do 12 to 15 transactions at an 80/20 split and deals beyond that level would be paid out at 100%.

Agents receive 75 shares in the company for their ϐirst closing and 250 shares upon “capping” (reaching the $80,000 GCI hurdle). They also receive 250 shares for each recruit who signs on with eXp and completes his or her ϐirst transaction. These share awards were higher in the earlier days of the company and are gradually decreasing as eXp’s agent count grows.

On the expense side of the equation, agents pay a $99 one-time fee for basic setup (business cards, online presence), a $50 monthly technology fee, and a $420 yearly tuition fee for eXp University (more on eXp University later in this report). Agents also pay a $25 broker review fee and a $30 E&O insurance fee for each transaction until they reach the $80,000 GCI threshold.

In the case of agents who have capped out (gone over $80,000 in GCI), they pay a $250 transaction fee (capped at $5,000 per year), a $25 broker review fee, and a $30 E&O insurance fee (which is capped at $500 per year, or roughly 17 deals per year).

Agents are responsible to a large extent for their own marketing and advertising spending; eXp can and does facilitate lead generation with a proprietary listing service called EXPLS, which has more than 900 online outlets, including some major hubs like Trulia, Yahoo Real Estate, Zillow, and This solution and a Google AdWord offering called “Making it Rain” are some of the services provided by eXp for a monthly fee, but a large majority of agents are generating leads and stirring up business on their own.

eXp University As part of eXp’s commitment to virtual collaboration and alignment, eXp University is an online, avatar-driven environment where agents take part in sales and service training, receive technology education, and collaborate with other eXp agents. Each agent has his or her own avatar and likely uses the low-cost support services to a large degree in their early years.

One of the most frequent complaints from new agents at any brokerage is the lack of training provided to become a productive member of the team. Either there is not direct or frequent access to brokers because of the size and time constraints of larger offices or the boutique nature of a smaller office can cause infringement concerns among other agents. EXp University offers a virtual 3-D world in which new and senior agents can receive more than 25 hours of training every week and collaborate with other agents worldwide to share best practices and new approaches without the concern of losing a deal.




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