An Interview with Founder and CEO of EXIT Realty Corp. International, Steve Morris
By Laura Henley
Since its real estate debut in 1996, in Toronto, Canada, EXIT Realty Corp. International has sold 1,200 EXIT franchises throughout North America, and has recruited over 40,000 salespeople into its system. Branded for its competitive residual income program, the company is also well known for specializing in effective teaching, training and coaching. In this exclusive interview with EXIT Realty Corp. International’s Founder and CEO, Steve Morris, he discusses his company’s happenings from top to bottom-from nearly losing his home twice, to paying out over $120 million in residuals since 2000.
As a franchise operation, when did EXIT Realty officially open for business?
Steve Morris: It all started on September 3, 1996, in Toronto, Canada.
What has been accomplished over the last 11 years?
SM: We have sold more than 1,200 EXIT franchises in North America and recruited over 40,000 salespeople into the system.
Have residuals made a difference?
SM: Yes, beyond my expectations. Over $120 million have been paid out to our associates since the year 2000 for sponsoring salespeople into EXIT.
Is this benefit a supplement to their sales commission?
SM: Yes, they are paid 70/30 on their first $100,000 of gross and 90/10 on the balance earned annually plus residuals.
Are these residuals multi-level?
SM: No, they are single-level and are paid out at a rate equivalent to 10% of the gross production of the salesperson sponsored into EXIT as their transactions close. This is all deal-driven, not profit-driven.
Does this amount vary?
SM: Yes, it reduces to 7% when the sponsoring agent retires and later to 5% as a beneficiary benefit.
Can you give me an example of how this works?
SM: John sponsors Mary into EXIT and she is recruited, by management, as a sales associate. Mary produces $100,000 gross per year. John’s benefit is equivalent to 10% of this or $10,000 annually. Over 20 years, he would receive $200,000 in bonuses. If he retired the first day she started, he would receive $140,000 over that time frame. If he passes away in that same example, his beneficiary would receive $100,000.
Who pays out these residual benefits?
SM: EXIT Realty Corp. International, in Toronto.
Is this legal?
SM: Yes. It is approved at all governmental levels in all states and provinces.
Why is it legal?
SM: Independent contractors are allowed, by law, to have a part-time job. EXIT’s head office simply acts as a secondary employer in the recruitment of its sales force. It has absolutely nothing to do with the public or a transaction in real estate.
Is it mandatory for EXIT agents to sponsor?
SM: No, it is simply financially beneficial.
Where does the 10% come from?
SM: Sponsoring is an assistance program to management in the recruiting process. In this regard, the monies are drawn from the broker’s portion of the commission on each transaction by head office.
How fast do associates receive their benefit?
SM: Residuals are immediately forwarded to the sponsoring associates by e-business once the sale has closed.
Is the sponsoring limited in any way?
SM: The broker of the office has the last say as to who is recruited for quality control. Other than that, our associates can sponsor salespeople into any office in the entire system and receive the benefit.
How long is it paid?
SM: For as long as the individual sponsored in stays in the system and produces business.
So in other words, it’s financially prudent to sponsor in the better salespeople?
SM: That’s absolutely true because they earn more and stay longer.
What about the rookies?
SM: Every one of us remembers what it’s like to get started. It was all about survival. EXIT is totally proactive in this regard.
How does EXIT differ from traditional companies in this regard?
SM: EXIT specializes in effective teaching, training and coaching that is specifically designed to burn out the inhibition of dealing with strangers. We specialize in self-image modification and reinforcement, canvassing and negotiations, presentations and public relations. All this is taught by experts. It’s all motivating, educational and strategic.
Do these methodologies solve the problems in the industry?
SM: There is no problem at the broker level that cannot be solved by good recruiting and there is no problem at the salesperson level that cannot be solved by more good listings. Sponsoring and excellent training cure both situations perfectly.
How does your company’s growth compare to other real estate firms?
SM: The top desk-fee company in the industry took 10+ years to create a sales force of 5,000. In that same time frame, EXIT recruited just under 30,000.
What about copycats?
SM: Negligible to non-existent.
SM: There is no copycat syndrome in the real estate industry because no one wants to be known by anyone else’s formula. We started with centralized control from the very first moment with EXIT when it came to paying out single-level residuals internationally throughout a salesperson’s entire sales career, retirement and beyond their death. You simply cannot re-tool an existing corporation to suit these requirements and make the payouts that EXIT does without causing a revolution or an internal meltdown. And, it’s a little late in the day to be an “also-ran.”
So, EXIT is one of a kind?
SM: That’s pretty much it. Seldom imitated and never duplicated.
Has anyone assisted?
SM: Yes, the Canadian government has granted EXIT $750,000 for developing the software necessary to pay out single-level residuals internationally right past death. They claimed that they had never seen anything as entrepreneurial and beneficial to the individual and one’s family. They have promised an additional $250,000 each February right to the end of the decade. You know you’re on to a good thing when your government backs you.
And you weren’t rich when you started?
SM: No, I was broke. Lunch money only. Almost lost my house twice.
Was there a defining moment?
SM: It was just before the turn of the century. The money exchange between Canada and the United States was $1 for a $1.50. In other words, as a Canadian, every time EXIT sold a regional franchise in the United States, we received $1.50 on our $1.00. This was a fabulous window of opportunity and it stayed this way for seven straight years. That was truly an advantage for our company. The truth of the matter is, that if I had been an American under these circumstances we never would have made it.
So your main focus was the United States?
SM: Absolutely. The financial return on our invested time was irresistible. The downside, however, was that the Canadian operation, to a great degree, was sacrificed in the process. There were only a few of us and we had very little money to work with. We had started right after the recession of the 1990s and the banks were not interested in a new, un-tried idea in the real estate business. We had to concentrate on what was most important next and many other considerations had to remain on the back burner.
Selling is all about getting appointments and making presentations. How did you launch into such fast growth?
SM: “60 Minutes With EXIT.”
That sounds like a presentation.
SM: Yes, it is. It really made a big difference.
You mean group presentations?
SM: Exactly. Hundreds of them. Right across the country. I have personally put on 520 one-hour presentations to groups of Realtors with audiences averaging 225 and in some cases topping the 550 mark.
Has this been successful?
SM: Totally! From day one, we had three things on our minds: sell regional/state rights; sell franchises; and recruit salespeople. We have averaged an 18% sell-through in this regard. We supply the fabulous food, drink and obligation-free environment, and I simply tell my story in one hour.
How is the reception?
SM: The reaction has been outstanding. I have had countless 30- and 40-year veterans tell me upon leaving that they had heard more truth in the last 60 minutes than they had heard in the past 20 years in the business, and that the only thing wrong with the system was that I hadn’t introduced it 25 years ago so that they could have taken real advantage of it and retired rich as a result.
Are you the only one putting on this presentation?
SM: Not anymore. My two presidents, Tami Bonnell in the United States and Joyce Paron in Canada, do absolutely outstanding “60 Minutes With EXIT” presentations. Between them, they will do over 100 a year, to huge audiences, and I’m talking about standing ovation experiences. It’s exciting!
Is there time in the day for senior executives to go right to the front lines in this manner?
SM: Absolutely. It’s part of our business plan. These presentations are strategized six to 12 months in advance. In fact, it has been so successful that we are now targeting to increase those presenting to 12 people over the next six months and then 18 by 2008 year-end. Our goal is 500 group presentations a year, every year.
So all of the key ingredients of this unique EXIT formula are in your “60 minutes with EXIT” presentation?
SM: That’s correct. It is a totally engaging format that clearly outlines the phenomenal potential of single-level residuals. It’s simply irresistible.
I see you enclosed a “60 minutes with EXIT” CD as a special gift to the readers of Real Estate magazine.
SM: Yes-and it’s probably the most important message of their entire career in real estate. The EXIT Formula captivates everyone who listens to it. EXIT is not so much about changing your brokerage. It’s more about the possibilities in the real estate industry that are simply not available anywhere else and never have been.
SM: EXIT is designed to become the very largest and most productively successful real estate company in the industry. Everything we do is tailored specifically to this desired result. We are all dedicated to creating a more empathetic environment with efficient systems, controlled input with a keen focus on absolute success. It’s all about getting the best possible return on the time spent by all of our people. Our salespeople are the assets of this corporation and they always will be. The enclosed CD tells the rest of the story. It’s for those who truly want the very best. RE