Keller Williams: Undercover MLM

Lee | October 28th, 2009 - 4:48 pm

There are very few companies that hide or underplay their marketing and sales strategy. After all, sales is what drives growth, profits and the lifestyle we crave in the MLM industry. It is a double-edged sword, of course. There are plenty of detractors and even comedians who have a field day with the cult-like atmosphere some MLM’s instill into their organizations. Religious zealots and multi-level marketers share a common thread-passion.

Over-hyped passion can just as easily kill the reputation or build that reputation to “Nordstrom” status. It is easy to tell the difference when you are not a distributor. Once you become one, the view from 30,000 is hard to come by.

Keller Williams is a unique organization because most people in the industry are unaware that a MLM sales system exists within the company. At a recent tradeshow, Exit Realty (another MLM real estate brokerage company) clearly talked up the benefits of their company and didn’t hesitate for a second to mention the MLM opportunity available to anyone.

Keller Williams focused on their brand, success, and direct compensation plan. In fact, as a real estate insider for years, I had no idea that an MLM opportunity existed. Is this good or bad? Does the fact that a company who builds their organization on referral marketing and NOT promote that know what they are doing? Are they underperforming? Have they lost their minds?

Clearly, they know what they are doing.

Keller Williams’ corporate office reports annual revenue of $119 million in 2007, the company’s 70,000 agents generated $3 billion in transaction commissions. The corporate office paid $40 million to its agents based on a seven-level profit-sharing plan. This puts the company in the top 100 MLM companies in the world. With approximately 75,000 agents it is a tiny company compared to the top 10 MLM companies that boast millions of distributors. But in the crowded field of real estate brokerage, they are ranked in the top 3 franchise real estate companies in North America.

Their reputation remains untarnished.

According to the J.D. Power and Associates 2009 Home Buyer/Seller StudySM, Keller Williams Realty, Inc., the third largest real estate company in North America, received the highest overall satisfaction ratings from home buyers among the largest full-service real estate firms for the second year in a row. The company also ranked second-highest among home sellers in the study.J.D. Power and Associates

“We couldn’t be prouder. This is an achievement our associates have truly earned. It is the face-to-face interaction and the relationships they build daily that has impacted this study and elevated Keller Williams Realty to another level in customer service,” said Mark Willis, CEO of Keller Williams Realty. “Knowing that this study was conducted during the toughest times the market has seen shows that spirit and dedication can make an impact.”

Most MLM companies are designed to fit anybody. You don’t have to be a nutritionist to market vitamins and you don’t have to be a chef to host a southern living or pampered chef party. However, to be part of a Keller Williams franchise, you have to be a realtor.

This extra licensing may add an additional level of respect to your MLM business. Of course, without leads, being the most respected realtor in the area won’t make you a dime. Be sure to keep your funnel filled DAILY with qualified leads. There is a FREE course you can sample right on my website. Simply fill out the form on the right and get started.

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13 Responses to “Keller Williams: Undercover MLM”

  1. Carlos says:

    Good article, however please note EXiT Realty IS NOT MULTI-LEVEL it is single level marketing (by choice). KW IS absolutely multi level 7 layers. That is a huge difference.

  2. Lee says:

    Thanks for your feedback Carlos.

  3. Anybody who truly understands the real estate industry and the reasons for why Keller Williams Realty is now the 3rd largest real estate company, know that KW is not an MLM!

    It’s really a pretty simple concept….it’s called creating loyalty!

    A National Association of Realtors survey of consumers determined that 86% chose a real estate firm for no other reason than because of an individual agent. This fact is proven time and time again. Whenever an agent switches from one brokerage to the next, ‘their’ clients follow. YOU are the reason people do business with you and you should build your career on this fact! At Keller Williams Realty, we recognize that the agents are the reason we do business. Our agent-centric business model is based on the belief system that the agents should be treated like partners. As stakeholders in the company, our agents:

    ■Share in the profits. In 2008, Keller Williams Realty distributed more than $30 million in profit share to associates who have helped to grow the company.

    ■Learn how to generate their own leads and run their own real estate business, so that they can create the leverage needed to create careers worth having, businesses worth owning and lives worth living.

    ■Take home more of their commissions with our unique commission structure.

    ■Are empowered to take leadership positions that impact the direction of the their office and the company. Only national real estate company that ‘opens the books’ to the agents.

    ■Share their ideas, secrets and models by teaching the training and educational classes It is this unique culture, that continues to be the greatest benefit of affiliating with our company. By sharing ideas, all of our businesses go to a higher level, thus creating more profit sharing for the office and the agents. A True Win-Win! This is what gives our agents an advantage over other agents at more traditional companies, where typically an agent’s greatest competition is within their own company and office. As a result of this innovative model, the secret of our growth (Now the 3rd largest company in the country!) continues to be our high level of agent productivity and agent retention.

  4. One of the biggest myths about Keller Williams Realty, is that our profit sharing business model is some sort of multi-level marketing or pyramid scheme model. The goal of this post is to provide new and experienced real estate agents that are interested in a more informed understanding of the Keller Williams Realty profit sharing model, all of the appropriate information on this subject.

    Let’s start off by addressing the three most glaring differences between the KW profit sharing model and a MLM or pyramid scheme type business opportunity. First of all, the traditional pyramid scheme model is no longer a legal business model to operate. Keller Williams Realty is now the fourth largest real estate company in North America, and since being founded in 1983, our business model has been approved in every state around the country and Canada.

    Secondly, multi-level marketing opportunities usually require both buying inventory/services upfront and mandatory quotas to reach any real incentives . At Keller Williams Realty, their are absolutely no costs and no quotas associated with participating in profit sharing.

    Thirdly, multi-level marekting models are typically designed to make the majority of the profits rise to the top of the multi-level tree. The reason that this happens, is that there is typically no limit to how many levels and people you can have underneath you. At Keller Williams Realty, our profit sharing model is ‘capped’ at 7-levels. This makes the KW profit sharing opportunity equal for everyone in the company. The top profit sharing real estate agents in our company, are only making money off of the profitability of the agents seven levels below them. As of right now, there are over 60+ levels in Keller Williams’ company tree, and many of our future profit sharing leaders are not even with our company yet!

    It is also critical that you do not confuse the KW profit sharing model with other revenue sharing real estate companies. Typically, in a revenue sharing real estate company, every time someone that you brought into the company closes a deal, you make a percentage of their commission. At Keller Williams, our business model is tied to profit sharing. This is the catalyst for what most of the real estate agents in our company truly believe is the biggest benefit of running their business at KW… the culture!

    Whether or not you make any profit sharing money through our company is a distant second to the the effects that the profit sharing model has on our training, education and culture. In an industry that has historically always been a ‘dog eat dog’ type business, you now have a company where there is a real incentive for the real estate agents to share their ideas, secrets and models. That is why at KW, our most successful real estate agents are the ones teaching the classes. The idea is very simple: TEAM: Together Everyone Achieves More!

    Another perspective to consider, is what the effect of treating your real estate agents like shareholders has on the growth of your company. Keller Williams was the only one of the top five real estate companies to grow in agent count in 2007 and also saw a 37% increase in market share. The bottom line, is that there is no other industry where the sales force(real estate agents) are more of the product then in the real estate industry. If you treat the agents as partners(share the profits, offer them the best commission splits, open the books, provide the best agent training & support and create a culture where agents share ideas), why would they want to every leave your company.

    To really put our amazing growth in perspective, you need to also consider the fact that KW does not spend any money marketing the ‘KW’ brand to the consumers like every other real estate company. Instead of spending millions of dollars a year marketing our brand to the consumers, we invest our money and resources into our real estate agents, because unlike other real estate companies who see their greatest asset as their company’s brand recognition, our growth is based on agent productivity and more importantly….agent retention.

  5. Misty Taylor says:

    I don’t like KW profit share.
    If you choose to work for another broker that cost less ($12,000 per year) and you put that money away for 20 years at 8% interest, you will have more money than 95% of all KW agents getting profit share, only use the interest and be able to put it into a trust and pass it on to your children and grand children.

    Attention KW Agents – Great Company – Way over priced!

  6. Lee says:

    Hi Misty,

    Thanks for providing your feedback regarding Keller Williams Realty. I like your idea of passing the trust on to future generations.

    - Lee

  7. Anthony says:

    The problem with your scenario is that most people (including Realtors) are not disciplined enough to take that extra money and put it into an account at 8% (they\’re lucky to find something at 2%) and build a legacy for their kids.

    As far as $12,000 per year for office fees??? I don\’t know what office you signed up at but the offices local to me are more like $1,200 per year even when you cap at 100% commission. You can find \"Free\" brokers everywhere but you have to weigh what you get with that \"Free\".

    By the way, great article Lee. Got your license?

  8. I found the blog from Google which is awesome. Thank Q for sharing such a good informative article.

  9. Lee says:

    I do not have my license, but used to be in the real estate industry :-)

  10. Anthony says:

    Send me an email. There’s another element you need to be aware of regarding the whole Keller Williams MLM scenario.

  11. The Keller Williams® business model is designed to have the agents grow the company versus the broker spending millions on advertising; this frees up money to be spent on training and education, which has been the main reason KW has continued to see growth in a down economy. In just a few weeks, Keller Williams® should be announced as the 2nd largest real estate brokerage in the US, surpassing Century 21. This is no small feat, but is expected due to the emphasis on building the agent’s business, not the brokers.

    Keller Williams® profit sharing is the icing on the cake and is a true gift for sharing a company business model with another associate who otherwise might not know there is a better option out there. I’m happy to share my story on how the KW business model has changed my life for the better.

  12. K says:

    Want to know the truth about KW? I worked as an office assistant there for over a year. I watched the CEO bring in brand new realtors and tell them they were going to make so much money off of “profit sharing”. He was such a vulcher, he would bring in these young, usually good looking people, who just got their license, tell them they would be millionaires, and he would help. Then he would drop them like cigarette butt the minute they signed. CEO’s for KW have a quota of new hires they must bring on per month. He would then either put his name as their profit sharing mentor, or one of his highest grossing agents. They would tell the new agents to bring on more and more people. This way, they would have all these new kids working who had no idea what they were doing. And when they needed help, guess who would dissappear? thats right, the CEo, the one who promised to teach them the ways. I had even heard him screaming at agents who just got lost in paperwork, or lost a sale. This man was evil, and he burned so many bridges. KW is a glorified pyramid scheme and anyone considering a career in real estate should cross this company off thier list. Terrible, terrible people.

  13. tuneinto says:

    KW is a scam. To Mr MovingCareers – there are legal MLM’s and 7 levels IS MULTIPLE LEVELS. Multi-Level-Marketing – that is what KW does. The fact is that those at the top make fortunes off their 7 levels. And the only possible way for a new recruit to make even a fraction of that is to build 4, 5, 6 and 7 levels deep. Well in a country with only 1 million agents, where do these “new recruits” come from?

    Put another way, KW has 82,000 agents – if each agent recruited JUST ONE AGENT and each of them did the same thing and so on, after just 4 levels there would be more KW agents than there are agents in the ENTIRE COUNTRY RIGHT NOW.

    So “7 levels deep” is only what the very early joiners and Gary himself have – and they are very rich, and very happy, and seem to think God did this for them. In fact they are scamming all new recruits by hawking the bogus “revenue share” lie.

    The cleverest thing of all is how they brainwash you into “helping others”. Not only do they save on advertising via their MLM model, they get their agents to teach. Of course this is great for training, and they have taken the training model to heart. So good has come of the lie, but it is a lie never the less.

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