The rapidly burgeoning cloud brokerage, eXp Realty, has hit Australian shores with its virtual reality technology offering agencies untold ability to scale up.
This month about 200 agents across five Australian states will join forces with the US-born brokerage, which boasts more than 22,000 agents in North America and here.
Expansion to the United Kingdom is also planned for this year and New Zealand has expressed interest in eXp Realty coming to the land of the long white cloud.
Following the 2007 Global Financial Crisis, Glenn Sanford founded eXp Realty in 2009 as a way to save overhead costs associated with bricks and mortar real estate offices and future proof business during times of economic downturn.
By the end of 2015, eXp Realty had 864 agents and at the end of 2017 this had jumped to 6,511.
Just six months later, the number of eXp Realty agents had just about doubled to more than 12,000.
In May last year, eXp World Holdings, the holding company for eXp Realty, started trading on the Nasdaq.
Its market capitalisation crossed $1 billion on the first day of trading.
In August this year, eXp World Holdings reported growing revenue 104 per cent, to a record $267 million, in the second quarter.
This was driven by a record number of transactions and agents at eXp Realty.
A VIRTUAL WORLD
The online brokerage provides agencies and agents with the ability to scrap bricks and mortar offices on the ground in favour of a 3-D, fully-immersive, cloud office environment called eXp World.
Built by virtual reality company virBELA, which eXp World Holdings acquired late last year, eXp World provides agents access to collaborative tools, training and socialisation 24 hours a day, seven days a week.
eXp World Holdings Executive Vice President Jason Gesing says the eXp Realty model provides agencies with a way to reduce costs while growing their business.
“There are great cost savings that come with not having brick and mortar offices in each of our markets,” he says.
“There are great cost savings with not having to replicate certain staff roles, but at the same time providing very interpersonal and engaging experiences.
“We’re in about 500 different Multiple Listing Service areas in the US.
“In any traditional approach to the business you would have 500 offices, 500 office managers, you would have 500 people answering telephones and 500 people doing transaction management and so on.
“We’re able to do that at a fraction (of the number of staff), and we’re serving the needs of 22,000 agents-plus in a very interpersonal way.
“We’ve got about 400 employees in total, and a lot of those are on the tech and development side.
“We really have a pretty small staff to agent ratio, but we’re still able to get to know our agents and our staff get to know the agents they’re working with and vice versa.”
The cloud campus eXp World is where agents gather to hold team meetings, attend onboarding sessions and have access to more than 30 hours of live training each week.
Once you’ve designed your avatar, with numerous options for hair colour, clothing and accessories, you can also receive tech, brokerage and accounting support within the virtual world, as well as chat to agents you bump into along the way.
SCALING NEW HEIGHTS
The technology means there’s no tiresome daily commute. Agents can work from wherever they are on the planet and agencies can grow irrespective of bricks and mortar boundaries and geographical constraints.
In Australia, eXp will hold all the relevant licences and be the entity responsible to the regulators, as opposed to individual agency owners.
“If you think about an agency owner headquartered in Western Australia, as long as that bricks and mortar is critical, and as long as you’ve got the real estate institute in Western Australia that’s keeping an eye on things, it can only grow so large,” Jason says.
“If that person wanted to go into NSW or Queensland, he or she would have to get an office in each of those markets, hire staff, get credentialled, invest in systems local to the market, understand all the regulations, supervise and hope everybody stays.
“Part of the value proposition is that the brokerage owner can cut out the cost that has been an albatross around his or her neck for many, many years and protect themselves against economic uncertainty or instability.
“That owner can now leverage his or her credibility in the industry and bring people into the organisation, whether they’re located in NSW or Queensland, whether they’re located in Denver Colorado or London, England.”
eXp Realty International Expansion Leader for Australia Stephen Lea says the way eXp Realty will pay and reward its Aussie agents allows and encourages them to grow their business and that of eXp Realty as a whole.
“We operate with a 70/30 commission split up to $100,000 in gross commission income,” he says.
“Once an agent reaches that cap, we take no more from them.
“Agents are often shocked that they get to keep all of their commission, minus a small transaction fee.
“The other great thing is that it’s a publicly-listed company on the Nasdaq and every one of our agents is a shareholder.
“When they have their first transaction, we give the agent shares in the business, when they cap they are given shares, and when they bring on another agent and that agent closes their first transaction they receive shares.
“Agents are able to build an asset base in shareholding.
“You can also opt to take five per cent of your earnings in company stock at a discount of 20 per cent.”
Stephen says the eXp Realty revenue sharing program also extends to earning 3.5 per cent of everything each agent you bring to the brokerage earns until they hit their cap.
If an agent generates $15,000 in gross commission for a sale, you will receive 3.5 per cent, or $525.
“This revenue-sharing program and the ability to share stock has had a massive contribution to our massive growth,” Stephen says.
CONSIDERING THE MOVE
One Australian agency heavily investigating the eXp Realty model is Peard Real Estate, which has 10 offices in Western Australia from Karratha to Mandurah.
Chief Executive Officer Peter Peard says if he joins forces with eXp Realty, he will look to recruit as many as 200 new sales agents.
“It would change the business in terms of bringing in more staff, greater volume and more scale, as well as creating market perception as market leaders,” he says.
“The benefit would be to grow from 90 reps in WA to 200 to 300 reps through this concept.
“The benefit would not be about making dollars through sales but about getting finance deals, property management and settlement deals, and about getting more referrals through having more sales consultants.
“It would all feed the bigger machine.”
Peter says the eXp Realty model would allow scale in a tough WA real estate market where commissions had slipped under two per cent.
He says consumers were forcing commissions down and selling agents were looking to businesses to make that up.
“It’s about getting scale via bolting onto eXp Realty’s scale,” Peter says.
“It’s a win-win because the sales reps love the idea of getting 70 per cent-plus of what they earn.”
Peter says the group has a large rent roll and he’d keep bricks and mortar, but agents would pay a desk fee to cover overheads or work remotely to avoid that cost.
He says this would have a flow-on effect to other efficiencies.
“At the moment I pay for the photocopiers and the electricity, but once the reps are paying a desk fee there’s cost-sharing and they would be more nimble, turn the lights off, turn the air conditioning off and it would make the business more efficient,” Peter says.
Peter believes being able to keep the Peard brand is also important, with the group having built a trusted name since starting in 1997.
Stephen says while eXp Realty is the umbrella brokerage, it allows agencies to keep their name and their brand.
“You are the brand,” he says.
One of the questions often levelled at eXp Realty is whether it’s possible to create a vibrant culture without bricks and mortar offices where employees gather to work.
Can that be done in the virtual world or does the remote location of each person also lead to isolation?
VirBELA co-founder Alex Howland says the idea for the technology behind eXp World stemmed from his background in organisational psychology and his desire to breathe more life into his online classes while studying for his doctorate degree.
Universities, including Stanford University and the University of California, also use VirBELA’S platform.
“The US Military is another customer as well and we do a number of training simulations with them,” Alex says.
CULTURE AND CONNECTION
In eXp World, users create their avatars to look just like them, voice technology means they speak in their own voice, and they can customise their office space with their own pictures or quotes or even pop in a fish tank.
There’s a virtual lake where you can take a ride in a speedboat and there’s a soccer field where you can come out for some team-building fun.
Come Halloween or Christmas, appropriate decorations may appear in the virtual world, and you never know which eXp Realty agent you may bump into and chat with as you go about your day.
“It’s a tough balance if you take people completely out of context,” Alex says.
“It will never be the real world, but part of the challenge is to make sure the world is relatable and easy to use.
“There are many things we can do here that we can’t do in a bricks and mortar environment.
“We can decide to add in a ropes course or games like that as team-building exercises.”
Jason says the connections and relationships formed in eXp World become blatantly clear at the company’s live events.
“What we’ve learned from the events is just how strong the relationships, the human relationships, are that are born and take route in here (eXp World),” he says.
“What you will see is someone standing there talking to someone and they hear a voice over their shoulder and they recognise it immediately because they’ve been in conversation with them in a group project or other kind of collaboration.
“They already know that person so the conversation picks up right where they left off.”
Jason says in any given month upwards of 65 per cent of eXp Realty agents use the virtual world to run their business.
IS BIG BROTHER WATCHING
Privacy is another question agents often raise about using eXp World.
Is big brother listening? Will agency secrets, vendor or sale details be overheard?
Alex says there’s no one listening in on your conversations, they use dex encryption and there are multiple areas you can use in the virtual world to hold private discussions.
“If there is a private conversation, there are ways to lock doors,” he says. “There are also executive-only rooms that only show up for the executives.”
Moving forward, Alex and his team are looking at ways they can improve the technology, including leveraging data to see if they can discover any patterns behind team performance.
Augmented reality is another area they’re looking at.
The idea is that avatars in the virtual world will have key information attached to them that you can see when you stop to talk to someone.
“We’re not exactly sure what those elements might be,” Alex says.
“It could be something like being able to see that that agent works in a particular city or that they’ve just had a transaction so you can say ‘hey, congratulations on your sale’.
“We’re not doing it yet, but it’s on the radar.”
Whatever eXp Realty does do next, the world will be watching.