EXPI - eXp World Holdings, Inc.

[Jurgis]

An idea from FinTwit.

Majority of business - "cloud" RE brokerage. There are some - likely zero - moonshots.

High growth, high trailing OCF/FCF.

There’s investor deck at http://expworldholdings.com/wp-content/uploads/2021/05/EXPI-Investor-Deck-May-2021-.pdf

Majority of revenues/earnings are from their RE brokerages. So there’s a risk of RE downturn and a risk of them losing/churning agents, although they claim very agent-friendly terms (see deck).

There is a risk that the company is promotional (see deck for buzzwords).

Anyone has opinion, risks, gotchas?

[Errold]

I do a bit of RE here and there in CA and recently switched brokers.

Have my broker's license but on the residential side I usually hang it with a residential brokerage for convenience.  Came across eXp as an option, but unless you do a decent volume, there are quite a bit of online e-brokerages that offer better splits.  Most flat fee + misc costs around 1k, maybe 2k on the high end.  I went with the latter as I only do a few transactions at most per year.

Compared to 16k of the first 80k at eXp, would need to sell 12-16+ ($400k-$600k) homes a year to be worthwhile unless the "cloud tech" is really great.  And taking into account nicer homes, say 1.5m+, easily 30k commission for a home.  At an ebroker you could sell 8-10 of them and still pay less than 16k in commissions.

They say cloud tech, but I am a bit skeptical.  Almost everything is done online now and what is cloud tech/based?  Everyone uses online storage/forms/esigs/escheduling/ekeys/mobile apps.  

Not quite sold on Virbela either.  VR chat for adults/companies? 

On the flip side they are growing and growing well, so they are doing something right and/or great at marketing.  Maybe they are only attracting the top agents who sell the most homes as they are the only one's who actually gain from the commission structure?

I believe KW does something similar, with coaching/mentoring and profit sharing at the branch and corporate level.

Might be worth looking into if you can see the average production per agent.  Could be  the 80/20 rule at work and they are attracting the top 20% of the real estate agents.  But at that point, if I was producing 300k-500k in commission, I would most likely just open my  own shop, but then again if I am making 500k, 16k doesn't really matter.

I guess if you look at it from eXp being a service and agents being a locked in customer, netting them 16k per year, you could estimate how many agents earning around 300k+ reside in each market they operate and figure out their TAM/penetration, etc..

Would have to look at their "tech" to see if there is anything to write home about.  But for me, after I saw the 80/20, I just picked from one of four or 5 e brokerages I contacted and went with them.

FYI, if I wanted to switch, assuming I have no listings/pending transactions, I can switch brokers within 1-2 days.  Takes 2, 1 page forms and possibly one phone call.

 

 

 

 

 

[Spekulatius]

Apparently, this is a MLM scheme where you can accumulate stocks for milestones including recruiting other brokers to EXPI. MLM scheme can grow quickly, but often they hit limits fast too. I have no idea which way this one goes.

 

[Errold]

Makes sense, instead of cash, you get stock, with 3 year vesting.

The tech seems helpful, but I think besides many of the general marketing/IT questions, many of the real questions are local, so I do not think a non local broker would be able to help out.  At least, they would need to be based in the same state/locale.  Questions regarding who pays for what in certain regions that is custom, local ordinances/disclosures/etc..  But I guess the local ICON agent would be able to help with the training and advise on that.

With all the ebrokers I have spoken with, all have different personnel handling accounting, agent onboard, training tools, etc...  They are small, but most have at least anywhere from 100-4000 agents, so they  have some scale where they can offer the same type of support, but not 24/7. 

Reminds me of a hamster wheel, I am guessing they will have to pivot when the growth stops.  Or is the monthly fee enough revenue to support the stock price once they reach 1m 2m 5m agents?