The UK operation of eXp – headed up by Adam Day – has launched a ‘Brokerage Model’ – aiming to convert existing branch-based estate agency businesses to the use of self-employed fee-earners.
eXp UK claims that the self-employed estate agency model is growing in agent numbers, listings and sales and quotes the estimate by Twenty EA that listings by self-employed agents now account for 1.8% of all UK homes sold.
By eXp UK’s own estimate it has 70% in volume of the country’s self-employed agents.
The ethos behind the new brokerage model is for traditional high street estate agencies with an employed workforce to become an eXp partner business, and to transform their valuers, listers and any fee earning staff who visit client’s homes with a view to putting them on the market, into self-employed agents in association with the eXp brand, whilst also keeping their existing brand.
Quite how that works in practice remains to be seen but eXp says that the benefits of the brokerage model to a traditional, high street agency business are [quote]:
- Retain your brand, whilst being part of a huge support network and culture
- The credibility of being associated with a $4bn revenue global business
- Business compliance, (AML, data, GDPR etc) is supervised and guided by eXp
- Technology (CRM, lead management etc) is developed for you with a nominal monthly fee
- Bigger commission-split incentives for your team
- Lower non-performance staff costs
- De-risk the potential loss of productive staff to the self-employed brands
- Access to the global eXp referral network of 89,000 agents in 24 markets
- Preferential deals on procurement from various suppliers
Adam Day, UK Expansion Leader at eXp said:
“Britain’s estate agency sector is evolving and adapting. Not just in technology and with new business models gaining traction but also in recognition of a return to more normal levels of house price growth and transaction numbers. Agency P&Ls are tighter these days and understandably, colleagues will be looking at ways of improving revenues whilst also mitigating overheads.
“The supported self-employed business model is growing strongly and I’m proud to be leading the way with eXp at the forefront of that growth. Traditional agents might be surprised at the improvement to their economics that can result from the new ‘brokerage’ partner model that we’re introducing, as well as benefits to their culture and their competitiveness.
“Our new brokerage partner model provides all the benefits of being a corporate business, without the downsides of being a corporate business.
“I believe that the UK estate agency industry is moving towards a self employed model and, at eXp, we don’t see agency businesses as competition – we see them as potential partners and believe we can help them to transform their business to having self employed agents, which will allow them to grow their business more quickly.
“They can even ‘use and abuse’ our knowledge and then go off and do it on their own, or they could simply just plug in to eXp UK, as we’ve already built the model, created the collaboration and nailed down the systems.”
The announcement of the new brokerage model by eXp UK prompted EYE to ask some questions as at face-value it appears that it is designed to reduce the risk to estate agency businesses at the cost of increasing the risk to the individual. We asked eXp if this was a fair comment.
In response they told us: “We don’t believe this to be the case. Different agents want different things. Some individuals want to grow a business which allows them to work on their own while servicing a lower volume of transactions. Doing so allows them to achieve a better work-life balance and we have supported those agents for the last four years.
“However, some agents want to develop a larger business with their own brand and we have also been supporting this concept since June. Having now proven that this can be an option for those who do wish for a larger business, it makes sense to offer this out to existing estate agency businesses now as well.”
We then asked if eXp has cleared with HMRC the self-employed status of those individuals in this model who are identified as linked to an estate agency corporate entity and presumably acting under that agency’s direction.
They said: “It will be up to each estate agency business to make sure that their Team Members are truly self employed. As far as eXp are concerned, the agent is not answerable to us in terms of territory, pledges or hitting certain targets.”
Moving from an employed to a self-employed position is a major career-choice. We asked eXp why successful staff in a well run estate agency would give up the benefits of employment – sick pay, pension, salary, car, employment rights? Does eXp consider the potential earnings from self-employment in this model to be sufficient to compensate?
They replied: “Why does anybody choose to pursue the self employed route? Not only does it offer the chance at a far more balanced lifestyle between our work and personal lives, but it also allows them to take the lion’s share of the commission they earn. The best performing agents stand to earn a great deal more money and every agent stands to gain more time flexibility.
“For some, this is the motivation behind their career choices, while others value the security of full-time employment. It’s about choice at the end of the day.”
Finally, we asked how many firms to date have joined the new model and how many does it expect to have joined by the end of 2024?
eXp said: “We have two firms that have signed the contract along with another eight or nine firms that are considering the model for their business. All currently under NDA, so cannot be revealed at this stage.”
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