On the 425th episode of MailRight Show, Robert Newnan and Jonathan Denwood discuss the differences between ReaJ and Exp Realty and share their thoughts about these two brokerages at the forefront of today’s digital revolution. Robert Newman founded Inbound REMS, one inbound real estate marketing company focusing on content and SEO-driven results. On the other hand, Jonathan Denwood is a joint founder of MailRight.com, a CRM and lead-generative platform for real estate agents, and offers a library of WordPress real estate website themes from which you can choose one and utilize the power of Facebook to generate leads.
Decentralized Real Estate Market
ReaJ and Exp Realty are part of many changes that are impacting the real estate industry.
Decentralization is hitting the entire real estate industry and decentralization from brands and things connected to leading brokers. Major metro markets are the most deeply impacted. California, the Pacific Northwest, New York, and places like this are seeing significant changes in how real estate agents train themselves, how they pay their community commissions, and what they consider good compensation packages to be.
Many agents generate commissions and traffic from video and leverage video inside hyper-local strategies. But that’s not the typical agent. When you look at the industry, it’s a tiny part of it. What is still dominant in terms of marketing? It’s the old school Book of business, word of mouth.
Now, you have people doing Twitter and Instagram and people leveraging messaging. They communicate directly to their audience, similar to how Elon Musk communicates directly to the consumer through Twitter. About 13% of the industry that has been gravitating has been keeping up a little bit more with the digital revolution.
Decentralized real estate is the wave of the future. Is it really in a multi-level marketing brokerage scheme? We don’t know, but it is a fast way to build a sales team whether or not it’s the permanent method or model.
ReaJ and Exp Brokerages Gravitating to Digital-First Real Estate Marketing Platforms.
ReaJ and Exp are brokerages where a small handful of agents gravitate to digital-first real estate marketing platforms. These platforms apply a multi-level marketing compensation package to agents because they don’t have a brick-and-mortar network of offices, which eliminates 30 to 50% of the cost of running a brokerage. If you’re virtual, you’ll save much on rigid and fixed costs.
Compensation System as an Agent
Exp created downlines of agents, but some people have put those agents under their names and offered training. So, some of the commissions that should go to that agent are now going to the upline. That means, you signed an agreement with both entities, but what’s happening is that some Exp agents are doing a lot of recruiting, and they’re not necessarily doing it ethically.
This is because of multi-level marketing. Somebody has created a compensation system and a structure where you, as an agent or a real estate trainer, want to train salespeople on the digital marketing side but don’t want to be real estate agents. Both Exp and ReaJ allow that, and you can receive commissions for doing it. You’re receiving a very small piece of the earned commissions of the agents that you recruit and train.
There are people out there who provide a huge amount of value to less experienced people, and you pay them for their training. You just constantly pay them for training. However, a lot of MLM people are professional signers. They just sign you up and let everybody else always provide all the value, if they provide any value. And that’s where it gets really shaky, especially since multi-level marketing is somewhat of a pyramid scheme, which is why it’s illegal in Europe.
Differences Between ReaJ and Exp
Another significant difference between ReaJ and Exp is that it plays into the Licensee acknowledging and verifying that the referral agent has not promised, enticed, or provided the contractor with anything of value, including but not limited to lead generation platform CRM, coaching tips, rebates or currency in exchange for naming referral agent. That is a challenge that is happening with Exp. There are a lot of people out there that have got aggressive with recruiting people into their downline, and they’ve gotten a little shady about how they do that so that they can collect compensation and stock incentives for recruiting It is a loophole that reels his field.
If you check the ReaJ Website, The CEO and many of the leaders of the company have done the in-depth mission statement videos, really in-depth reasons for why they established Real, what the mission of Real is, who they’re trying to serve, why they’re trying to serve them that way, what specifically are they aiming to accomplish with Real. It was such an incredibly comprehensive, passionate deep dive, especially by the C.O.O. of the company. They seem to understand what agents are caring about right now. They seem to desire to serve those agents, help the agents that need help, reward the agents that are learning, teaching, training, and growing, and pay attention to the quality of the experience that all real agents have.
Meanwhile, Exp does not focus on the mentorship experience that a multi-level marketing company could theoretically Excel at.
Exp and ReaJ Fees and Commission
Exp charges a startup fee: $149 startup fee, $85 cloud brokerage fee, $25 transaction review fee, $40 risk management fee, and $250 transaction fee after you cap. Exp also charges a $149 or $500 fee and $225. In other words, eXp offers $16,000 worth of shares by hitting their agent award. Their agent equity program lets you purchase shares from your commission at a 10% discount.
ReaJ offers many more paths to getting stock, including purchasing stock out of commission and earning up to a 50% fee and additional shares with a max of $8,000. It also has a significantly better profit versus loss statement. ReaJ is significantly more able to earn revenue via stock, and their cap is much higher—24 versus 16, which is a 30% to 40% difference. Purchase stock out of commission and earn 50% additional shares, with a maximum of 8,000 bonus shares annually.
They’re getting very aggressive with agents that are willing to reinvest some of their own income into stock. Their stock is selling at $3 a share right now, and they’ve got this incredible price versus earnings. There’s much more appealing from that end of it.
Whether ReaJ or Exp is the answer for real estate, a good percentage of all marketing and sales is now happening in what one could call the influencer or information age revolution. It comes down to individuals who provide a lot of value to you. And if that individual has provided a lot of value to you, you are more inclined to do business with them.
