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EZ Realty rides wave of change in commissions
CNY Business Journal (1996+), Jan 07, 2005 by Dickinson, Casey J
DEWITT - Esther Zorn's real- estate business is part of a wave of change in the industry. Zorn's Exit EZ Realty is a local franchise of Exit Realty, an international real-estate franchisor that has changed the way real-estate agents are paid.
Founded eight years ago in Toronto by Steve Morris, Exit Realty follows a different compensation model than the traditional real-estate company. In addition to sales commission, Exit Realty agents receive a 10-percent residual bonus, a 7-percent retirement plan, and 5-percent beneficiary residuals for recruiting new agents. Every time a sponsored agent makes a sale, the sponsor receives a residual payment.
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The added compensation doesn't come out of the agents' commissions, but rather from the broker's cut, says John Farrell, Exit's upstate New York regional franchise owner. Farrell left Century 21 in 2002 to lead Exit's Upstate expansion because he believed it had a better system than traditional realtors. Farrell owns the Exit franchise rights to all of Upstate. He can then license as many sub-franchisees, such as EZ Realty, as he wants. There are currently eight Exit Realty offices in his Upstate territory, including Farrell's own in Johnson City.
Farrell say's the Exit model solves many of the challenges realtors face in building qualified and stable salesforces.
"Recruiting, retention, and training are the biggest problems in the industry," says Farrell, "and this solves them all."
Zorn says the residual model fosters a spirit of cooperation in the office. Unlike other agencies, Exit Realty doesn't charge "desk fees" to cover office expenses. Since opening in July, the area's newest real-estate company has sold 13 homes for a total of about $1 million. Exit EZ Realty has nine agents that serve Central New York.
Zorn opened her Exit office this summer after searching for a new business venture. She tired of a career in public relations as the business became more electronic and involved less personal contact.
"I wanted to get out and meet people," she says, "real estate lets me get out and do that."
After obtaining her real-estate sales license, Zorn began selling for a local auction firm. She met Farrell at an industry conference, and he told her about Exit's residual formula.
The Exit model sounded good to Zorn, and she moved on to get her broker's license and open her own Exit office near Carrier Circle in the Town of DeWitt.
Zorn traveled to Toronto for her training as an Exit Realty broker. Exit agents also attend training seminars and video presentations. She hopes to grow her Exit EZ Realty office as large as the Central New York market will allow. The area has a strong housing market, and Zorn believes it will stay that way. Exit Realty has nearly 500 franchises and 11,000 agents nationwide. Florida itself has 100 Exit franchises.
Exit's compensation plan doesn't involve "multi-level marketing." The recruit generates residuals only for his initial sponsor and no one else, explains Zorn. Residuals continue after death, as the 5-percent plan allows agents to designate a beneficiary and provide financial security for family members.
On home sales of up to $100,000, 70 percent of the commission goes to the agent and 30 percent to the broker. Over $100,000, the split is 90 percent/10 percent, says Zorn. Exit receives a $150 transaction fee on each sale, up to a maximum of $2,700 per year, she adds.
Copyright Central New York Business Journal Jan 07, 2005
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