eXp Realty Pyramid Scheme Or Legit Agency? What Is eXp Realty?

Is eXp Realty a pyramid scheme, or is it a legitimate agency that you can take advantage of to accelerate your real estate career?

If you’re reading this eXp Realty review, you’re probably a real estate agent or you’re thinking about becoming one…

And you’ve been approached by an eXp representative with an opportunity to get into the real estate business.

But before jumping into anything, you’ve decided to do some research…

And you immediately found people accusing eXp Realty of being a scam or some type of pyramid scheme.

So what’s the deal?

Well, the truth about eXp Realty is that their business model is based on network marketing, commonly referred to as direct sales or MLM (multi level marketing).

There are many misconceptions about network marketing. 

Mainstream media and many others continue to confuse the network marketing business model with illegal Ponzi or pyramid schemes…

But there are significant differences between pyramid schemes and network marketing.

Feel free to read my in depth analysis on what MLM is and why it could be a good option for you.

Long story short:

The eXp Realty business model is legitimate and it’s certainly not some type of scam or pyramid.

In fact, eXp Realty is taking extensive action to dispel the rumours and train their agents properly so as not to further fuel the accusations.

In this article, we are going to dive deep on how the business works, what differentiates eXp from a pyramid scheme, and whether or not this is a good option for an aspiring real estate professional.

First, let’s dig into how this company got started.

eXp Realty History

Glenn Sanford, founder of eXp Realty, started this company in 2009 with a very unique vision in terms of how the business would operate.

Unlike traditional real estate agencies, eXp Realty is a cloud based business, meaning they don’t have any brick and mortar offices. Their main headquarters is located in Bellingham, Washington.

eXp Realty operates in nine countries worldwide, including:

• United States
• Australia
• Canada
• France
• India
• Mexico
• Portugal
• South Africa
• United Kingdom

The list of countries is constantly growing so there may be many more countries by the time you’re reading this. I will try to update the list periodically.

Agents can work from pretty much anywhere in the world and are able to earn larger commissions than most agencies can afford to pay out.

The history of the eXp Realty business is short since they have only been in business since 2009, but they have experienced explosive growth in a few short years.

In fact, they reported nearly $4 billion in revenue for 2021 after seeing an explosion of new agents joining the business. 

Globally, eXp has reported a total of well over 70,000 agents.

eXp Realty Lawsuit

It shouldn’t come as a surprise that eXp Realty has been sued. 

Any company that grows at an incredible rate is bound to ruffle some feathers out there, and lawsuits are inevitable.

But surprisingly, there haven’t been any lawsuits levelled at eXp under the allegations of running a pyramid scheme.

This is a very common attack vector for any network marketing company and countless MLMs have fallen victim to these types of allegations, such as Amway, Primerica, and Nu Skin.

In Early 2021, Re/Max filed a suit against eXp Realty, alleging that eXp was luring away agents. 

According to Re/Max:

eXp has “induced” multiple Re/Max franchisees to “abandon” their franchise before the end of the agreed-upon term, and contacted numerous others about doing the same. The interference has happened for several years but in recent weeks, eXp’s efforts have intensified… We welcome fair competition within the industry, but this type of behavior is not that. Misleading agents and encouraging franchisees to default on their contracts are unlawful business practices. We will not stand idly by as they attempt to tarnish our brand. – May 25, 2021

Only a few months after filing, Re/Max settled the lawsuit with eXp. Re/Max only had this to say about the settlement:

Per the terms of the agreement, we cannot comment further.

eXp CEO Jason Gesing stated that:

The settlement did not involve the exchange of any money or an injunction.

Re/Max has recently begun to slim down their operations and create more flexibility for its agents. 

Is eXp Realty BBB Accredited?

While eXp Realty is listed on the Better Business Bureau website, it is not BBB accredited. 

eXp Realty reviews left on the BBB website are overwhelmingly negative. To be fair, there are only a handful of reviews on the website so far, so it’s a very small sample size.

eXp Realty Explained

So what is eXp Realty all about?

What really stood out to me as I was researching this company is how they put their agents first, rather than a small group of wealthy shareholders.

According to eXp Realty’s official website:

At eXp, individual success is leveraged through a collaborative effort. eXp’s environment not only promotes growth but encourages inspiration, allowing others to grow too. All of this is supported by eXp’s unique equity awards opportunities, which create an undeniable shared interest in the success of our organization.

Individual success is leveraged through a collaborative effort.

Unlike most real estate brokers that offer profit sharing, eXp offers revenue sharing. 

This is an important distinction since a traditional broker will pay out profit sharing incentives after all businesses expenses are calculated and paid for.

eXp on the other hand, includes revenue sharing as a part of their expenses.

This ensures much more powerful monetary incentives for agents.

Agents are incentivised not only to sell properties, but also to find more quality agents to bring into their team.

They will receive monetary gain through the revenue sharing program by training and empowering budding new agents.

This heavily incentivises collaboration and a peaceful work environment.

Anyone who has worked as a real estate agent knows that it can be a cutthroat business. Work atmospheres can be overly competitive and toxic.

Agents are not really incentivised to help newcomers succeed, unlike eXp.

eXp Realty’s business model has allowed them to grow at an incredible pace, which is reflected in the number of agents and annual revenue.

How Does eXp Realty Work?

eXp Realty has taken on a “market disruption” business style.

This often happens when companies are born out of a crisis.

After the housing crisis of 2008, it became obvious to founder Glen Sanford that big changes were coming to the real estate industry and the global economy as a whole.

As the crisis deepened and the debt bubble rapidly unwound, revenues for businesses and individuals all over the world plummeted.

Assets dropped in value, most notably real estate.

This affected corporate revenue and more importantly, corporate balance sheets.

Sanford recognised that businesses were needlessly holding brick and mortar real estate locations. This was contributing to the financial pain since expenses needed to be paid for all these office buildings.

And Sanford recognised that digital technology was rapidly evolving and few real estate businesses were taking full advantage of it.

So eXp Realty was born in 2009, based in the cloud. There was no central location that agents needed to work from or report to.

This drastically reduced business expenses which allowed them to pay their agents very generous commissions.

It also allowed them to be forward thinking and invest in digital solutions.

Tech Solutions Available To eXp Agents

It would have been hard to fathom only decades ago, that real estate agents could work primarily from home and still have all the support, community, and tools available that they need to succeed and grow their business.

Few were able to see the digital transformation that would consume the global economy.

At least not soon enough.

eXp Realty did. Here is a list of some of the technologies available to eXp agents that they can use to further their career.

1. eXp World

Long before the term “metaverse” was so widely talked about, eXp adopted a version of the metaverse for their agents.

It is essentially an online campus. At first glance, it appears to be similar to a Sims game. 

This online campus contains virtual meeting rooms, an auditorium, and virtual offices staffed with real people who provide:

• Accounting
• Human resources
• Brokerage operations
• Legal support
• Tech support
• Training
• And more

Everything you could possibly need to conduct your real estate business can be found in this creative and engaging world.

2. Workplace 

This is an online social platform built by Facebook that eXp agents can use to work collaboratively all over the world.

I would describe it as very similar to Discord.

3. eXp Enterprise

This is an agent’s online business dashboard where they can see all their business metrics.

It is essentially their own personal financial reporting hub.

4. Transaction Management

This is where agents can manage their transactions from start to finish. Documents can be signed digitally with full security and regulatory compliance.

Another digital solution, completely paperless.

5. CRM and Lead Generation Tools

This is another digital solution. Agents can collect and organise leads online and manage customer interactions. The software can be integrated with an agent’s own WordPress website.

eXp Realty also provides tools to drive more leads and sales into the funnel.

6. Marketing and Branding Tools

This is another forward thinking solution, proving that eXp Realty anticipated what the future of work would look like a long time ago.

Agents are provided tools that allow them to build their personal brand, including:

• Personal logo design
• Business cards
• Flyers
• Brochures
• Signage
• Listing presentations
• Online marketing materials

The eXp Realty business model, being uniquely cloud based, allowed them to weather the 2020 COVID-19 pandemic with relative ease.

Considering all the digital tools they’ve built and provided to their agents…

I believe that they would have survived and rebounded from the 2008 crisis much quicker than all of their competitors even without massive monetary and fiscal stimulus pumped into the markets by central authorities.

As we mentioned, it is clear that eXp Realty anticipated what the future of the economy would look like long before it happened.

This has put them in a clear leadership position in the industry. It will allow the corporation, as well as individual agents, to survive future financial crises and collapses much easier than their competitors.

How To Join eXp Realty?

In order to join eXp Realty, you will need an active real estate license for your geographical location.

Then, you will need to reach out to an existing eXp agent who can assist you with joining the company.

The startup fee is $199, and $140 per month moving forward.

So let’s talk about how commissions are paid out to eXp Realty’s agents.

eXp Realty Commission Structure

From what I’ve found, other eXp Realty reviews did not describe the compensation plan in a detailed yet simple manner.

So that’s what we’re gonna try to do here…

First let’s talk about how a typical real estate transaction goes.

By law, real estate agents can not directly receive income from a client. It must be done through a broker.

An example of a well known broker is Re/Max Realty.

When a real estate sale is made, the broker and agent will split the commission which is usually pre-negotiated.

Common commission splits range from 50/50, 60/40, or 70/30.

The agent would typically get the larger end of the commission since she did most of the heavy lifting.

So how are the commissions split in the eXp Realty pay structure?

As an eXp Realty agent, you would keep 80% of the commission and the broker (eXp Realty) would keep 20%.

That’s already significantly more money in the agent’s pocket than most others pay.

But it actually gets better…

Once you (the agent) has paid $16,000 to the broker, you would keep 100% of the commissions for the rest of the calendar year.

As an agent working with eXp, your goal each year would be to reach ICON Agent Status.

In order to reach this goal, you would need to do 20 transactions after you’ve hit the $16k cap…

OR…

$500,000 in gross commission income.

If you manage to hit ICON Status, you will receive the $16,000 that you paid back in eXp stock.

The eXp stock is traded on the NASDAQ under the ticker symbol EXPI.

As I’m writing this in early 2023, you can see that the stock has come down a lot since 2021… I don’t think it was a big secret that we were in a huge stock market bubble in 2021.

But the long term trajectory of the stock is up. 

And as long as our current financial system stays intact, real estate will continue to rise in price and by extension, so will EXPI.

But there is another way to earn income with eXp Realty: 

Revenue Sharing.

Built into the eXp Realty compensation plan is the ability to build a team of agents that will earn commissions for you.

When you recruit new agents into your team, those people will be called your downline.

The agents that are above you in the organization are called your upline.

So let’s say that you recruit an agent named Sarah…

For every sale that Sarah makes (below the $16k cap), you will earn a 3.5% commission. (This commission comes out of the 20% end of the split which goes to eXp.)

Now let’s say that Sarah recruited someone. 

His name is Bill.

And Bill starts making sales, too. 

Well, for every sale that Bill makes, Sarah will get a 3.5% commission and you will get a 3.8% commission.

As your sales organisation grows, this can become very lucrative over time.

Have a look at the chart below which shows the revenue sharing commission.

Hopefully that all makes sense.

To be honest, this explanation is quite simplified since there is some nuance and complexity in the revenue sharing program, but this should give you the general idea.

Basically, it comes down to 2 main objectives:

• Sell real estate
• Build a team of agents underneath you

You will want to spend the vast majority of your time mastering the art of selling real estate.

Building your sales force is a long term goal, and it should not distract from the business of selling real estate.

You can learn some of the specifics from this PDF document found on the eXp official website.

eXp Realty Joining Fees

In order for you to qualify for the business and start selling houses, you will need to pay a monthly fee of roughly $140.

This includes licensing and all the tools we spoke about earlier.

How Much Do eXp Realtors Make?

Look, this should go without saying…

But I gotta do it.

The amount of money you will make in eXp will completely depend on your performance.

This is not a job.

If you don’t make sales, you will not get paid.

If you’re reading this eXp Realty review, I’m sure you already know that.

You probably have experience selling real estate already so you know how the business works.

Some people have had their real estate license for years, but have never made any sales at all.

And there are some who take their business seriously and out-earn 90% of agents in the marketplace.

eXp is not different.

All things being equal…

The payouts are much higher in eXp Realty than the average broker…

And the tools, training and support you get is second to none.

So if you’re an agent who is already doing relatively well with your current broker, you could certainly increase your income just by moving to eXp.

Is eXp Realty A Pyramid Scheme?

One of the first things you’ll find when researching eXp is claims about the validity of the business model.

One article after another is written about claims of eXp Realty being some type of scam or pyramid scheme.

What’s the deal?

Are the eXp Realty pyramid scheme allegations true?

The short answer is no.

There are a lot of misconceptions about the network marketing business model, also referred to as direct sales, MLM or multi level marketing.

(These terms are all used interchangeably).

Over the last few decades, there have been several illegal Ponzi and pyramid schemes that disguised themselves as legitimate network marketing companies.

Many People joined these “businesses” and when they inevitably collapsed, many people got badly hurt.

And they received a lot of noisy and negative publicity.

For good reason!

Innocent and unsuspecting people experienced real financial pain, and the general public should always be made aware of these scams so that they can avoid them in the future.

The problem is, the corporate media doesn’t write stories educating people about the differences between real MLM opportunities and illegal pyramids.

Thus, the general public simply equates all network marketing companies with illegal scams.

This has done real long term damage to the reputation of the network marketing industry as a whole.

What Exactly Is A Pyramid Scheme?

When you join a pyramid scheme, you would simply be paying for a spot in a pyramid shaped organisation.

That’s it.

You would not receive any valuable goods or services for your money.

The people at the top of the pyramid get filthy rich, but the people at the bottom lose all their money when it inevitably collapses.

And therein lies the problem…

No goods or services are rendered.

Which means the marketplace can not sustain the “business” model.

Look, an MLM business is not really that different from any other type of traditional business.

The main difference is that marketing and distribution is done primarily by independent sales contractors instead of corporate giants.

And revenue from the MLM company is shared directly with these contractors (commonly called reps or distributors).

The only way money exchanges hands in a real network marketing business is when goods or services are rendered.

It’s simply a value for value exchange.

Goods or services (value) are exchanged for money (value).

It’s the way our entire economy functions and sustains itself.

But in a pyramid scheme, the market can not sustain the “business” model because there is no product or service being distributed… 

There is no demand.

There is nothing to be demanded.

Which is why the free market can not sustain it, and why illegal pyramids always collapse under their own weight.

And innocent people get hurt.

What About The Pyramid Shape?

Many sceptical folks might point to the pyramid shape that a network marketing sales organisation starts to take as it grows.

But what they do not realise is that all hierarchies tend to take on the shape of a pyramid.

Let’s have a look at the traditional corporate structure:

Looks suspiciously like a pyramid scheme, doesn’t it?

Look, we as humans always organise ourselves into hierarchies. We evolved to do so; it’s how we climbed our way to the top of the food chain.

Some variation of hierarchy is unavoidable in society and is essential for human cooperation and flourishing.

You see it in all human organisations.

• Friends groups
• Governments
• Large and small businesses
• Charities
• Families.

But let’s go back to the example of the corporate pyramid.

If you are working in the mail room of a large corporation, you will never earn more money than the CEO.

Unless you manage to climb the corporate ladder and take CEO’s job, displacing other employees all along the way.

With network marketing, you can most certainly out-earn anybody who is positioned higher than you in the “pyramid” organisation.

It’s merit based…

If you make more sales and recruit more reps, you will earn more money.

It is inherently more fair than any other human hierarchy that I’m aware of.

So equating network marketing to a pyramid scheme just because of the hierarchical nature is either ignorant or malicious.

There’s just no other alternative.

Here’s how Oxford dictionary defines a pyramid scheme:

A form of investment (illegal in the US and elsewhere) in which each paying participant recruits two further participants, with returns being given to early participants using money contributed by later ones.

Furthermore, the FTC (Federal Trade Commission) website has this to say:

Some people confuse pyramid and Ponzi schemes with legitimate multilevel marketing. Multilevel marketing programs are known as MLM’s, and unlike pyramid or Ponzi schemes, MLM’s have a real product to sell. More importantly, MLM’s actually sell their product to members of the general public, without requiring these consumers to pay anything extra or to join the MLM system. MLM’s may pay commissions to a long string of distributors, but these commission are paid for real retail sales, not for new recruits.

Like with everything in life, it’s always important to understand nuance and complexities Instead of making blanket statements about a subject that one knows very little about.

How To Succeed With eXp Realty

Let’s talk about one of the most important things you will need to learn in order to become a top earner with eXp Realty…

Personal branding.

Because eXp operates exclusively online, you will want to learn the art of online lead generation.

Don’t get me wrong, traditional marketing methods still work…

And you should use them.

But I would argue that internet marketing is an essential skill that you should master in order to take full advantage of eXp Realty.

eXp already has the online infrastructure available to you. 

All you need to do is flood the system with leads so that you can start taking on clients and making sales.

eXp Realty has all the training available to you to make you an extremely effective agent.

So here’s what I really want to share with you:

How To Recruit New Agents Online

The most powerful thing about using the internet to recruit folks for network marketing is that you can attract people to you.

Not just that, but you can attract targeted people.

This means that you can attract interested people who already meet the qualifications for your business, reaching out to you… often ready to get started on the spot.

This practice is called attraction marketing.

Let’s talk about the 3 main steps it takes to achieve this.

I. Build An Audience

There are many platforms which you can use to build an audience online. Some of the most common ones include:

• Social media
• YouTube
• Blogging

Before you just arbitrarily start creating content online, you will need to do some brainstorming.

• What kind of person am I looking for?
• Do they need to be an active real estate agent?
• What are they looking to learn?
• What kind of things do they search for online?

Once you have these things figured out, you can start creating content that is specifically targeted to the exact type of person you’re looking for.

In your content, you should never come across as trying to sell something or recruit anybody.

You simply need to provide value.

Create educational and entertaining content that your targeted audience will seek out.

If done correctly, you will start to build an audience over time. 

An audience that is interested in the exact type of thing you are offering.

The goal of your content creation efforts is to become a thought leader and an authority in your niche.

When your potential prospect is asking himself a question about real estate, you need to be the person that comes to their mind as someone who could provide an answer.

II. Build An Email List

In order to entice people to join your list, you will need to create some type of digital freebie that they can only get access to by entering their email address into your website.

The freebie could be:

• eBook
• Weekly newsletter
• Video course
• Webinar replay
• Audiobook

Whatever type of gift you decide to offer, it should be so incredibly valuable that your new lead won’t be able to believe they got it for free.

This will build so much more trust that your leads will be hard pressed to resist any recommendation you make.

III. Email Your List Regularly

After your reader joins your email list, you should continue providing a ton of value.

If the first thing you do after they join your list is to spam them with a business opportunity or product, they will immediately unsubscribe and you’ll never hear from them again.

But you have to make money, right?

So it’s OK to send out offers here and there, but do it sparingly.

I would say about 80% value and 20% offers is a healthy ratio.

This is a very simplified explanation of internet marketing, especially as it relates to recruiting for MLM.

You can read my full guide on how to succeed with digital network marketing here.

I would also recommend an article where I did a deep dive on traditional offline methods of building an MLM business. It will provide you with a solid understanding of how the mechanics of network marketing works. Read it here.

eXp Realty Pros and Cons

Not everything is peachy with eXp Realty.

Most notably, you will need to overcome the negative reputation of network marketing when you are looking to recruit agents into your organisation.

That’s just the reality we live in.

But it’s not just network marketing…

It’s sales in general.

As someone who is thinking about selling their home with eXp Realty, you would immediately find a whole lot of horrifying reviews by doing a simple Google search.

eXp Realty’s Yelp page for example, is filled with horrendous reviews left by unsatisfied clients looking to sell their home.

So let’s talk about some of the eXp Realty complaints.

One of the first things I noticed was the nature of the complaints.

It sounds as though all of these complaints were logged by folks that were dealing with extremely inexperienced agents.

All of the problems mentioned in the complaints were easily avoidable and could be avoided by any agent worth their salt.

Perhaps a part of the problem is the aggressive nature by which some of the agents are recruiting more agents?

They may be attracting inexperienced people into the business rather than specifically looking for qualified professionals.

This could be exacerbating any eXp Realty problems that may exist.

That, of course, is pure speculation.

Another thing to keep in mind is that Yelp is truly a bastion of negativity. 

Folks flock to the platform to voice their dissatisfaction, but very rarely to voice their pleasure.

The truth is, every company has provided negative experiences to at least a portion of their clients.

Especially a large company the size of eXp Realty.

Personally, I would not put too much weight into the Yelp reviews…

But that’s just me.

So what are the main disadvantages to eXp?

• Somewhat of a shaky reputation
• No one-on-one water cooler conversations
• Overly aggressive recruiting

What are the main advantages?

• Forward thinking business model
• Tech oriented
• Generous payouts
• No income cap
• Possibility to build global sales teams

eXp Realty Review Conclusion

The main question I wanted to answer in this eXp Realty review was whether this is a pyramid scheme or not.

Hopefully you now have clarity on that!

At the end of the day, it will be up to you to decide whether this business opportunity is a good fit for you.

I do not personally have any affiliation with this business, so any opinions I put forward in this article are purely based on my own research and not personal experience.

However…

I truly believe this could be a good option for somebody who wants to take their real estate career to the next level.

Any company that foresaw the digital revolution coming beforehand is alright in my books.

My hope is that you can now move forward with confidence and conviction, no matter what you decide going forward.

If you have any more questions that I didn’t cover in the article, feel free to leave them in the comments section below, and I’ll get back to you ASAP.

You might also consider having a look at our MLM Frequently Asked Questions page.