Keller Williams Pyramid Scheme

[sfbay]

I am in the san francisco bay area and just joined Keller Williams Realty and have been there for less than 2 months. I am completely new to real estate, and have never been with any other broker. I didn't do much research on brokers because I figured I would sell myself and not the brokerage. However after the short time I've been at Keller Williams I have realized what the company is all about: Multi-Level Marketing or a Pyramid Scheme (KW agents call it profit share).

I am frustrated with the way they operate, and would like to pick myself up and get on with another broker. What I would like is some help in finding the right one. I come to realize the choice in choosing a brokerage is much more important than I thought, and selling yourself (and not your brokerage) is not possible with every broker.

Some points that I don't like about the company:

1. Pyramid Scheme: Keller Williams calls it profit share. When you (as an agent, or any other employee) refer someone to kw you receive a portion of the profit the market center makes from their sales. When they refer other people you receive a portion of their profit as well. There are some people who are employed at Keller Williams who are licensed, have never sold real estate, and do not intend to. Some people in Keller Williams make in excess of $200,000 per year without selling real estate, without owning any of the market centers, but strictly by recruiting others. My team leader says you do not have to participate in the profit share if you don't want to, but in reality the only way not to participate in it is to not sell any real estate (and who wants that?).

2. Junk Mail: Keller Williams is probably the biggest company on Junk Mail. They want their agents to send out junk mail to your database once every 10 days (it's called the 33 touch program). If you have 2000 people in your database (which is what they recommend), this will cost you $2340 per month just in postage ($1440 per month with postcard stamps)!!

3. When referring business out of the area or out of state, they highly discourage using any other real estate company other than keller williams. (this goes back to the pyramid scheme). This is highly impractical because keller williams isn't everywhere. If I were to refer someone out of state (and say the nearest keller williams office is 100 miles away). I would be doing a huge disservice to my client by insisting to go with keller williams, but because of the profit share they insist you go with keller williams no matter what.

4. Keller Williams does not let their agents buy and sell their own property. If you would like to sell your home, most of the time you have to go through another KW agent (this goes back to the profit share again).

5. There is no floortime: I have heard from other people in real estate how important this is to their business. We do not have any such thing. Every lead we get is on our own with no help from the company.


So anyhow I'm just really burnt out from the whole keller williams thing. Most of the problem is the profit share thing. I would like to concentrate on selling homes and not worry about recruiting people. Even if I don't recruit other people I'll still be in an environment of other people who are just trying to recruit people (and that also bothers me greatly). Any help or suggestions on some reputable companies that actually put pride into selling homes, and not trying to sell me on some pyramid scheme.

Things that I would like

1. No pyramid scheme (required)
2. Ability to buy and sell your own property
3. floortime available
4. independent when it comes to getting leads. I prefer to get my leads through methods other than doorknocking and cold calling. I do not have a problem with those people who are big on those methods, but it is highly impersonal and the quality of clients you get by these methods are generally low. I do not want to go with a broker who insists that that is the only way to get leads.

Any comments, or advice?

[vrem]

I just had a friend who left them becuase of this. Anyone else have any feedback?

[sfbay]

Part of the reason why it took me so long to wake up is because of the mindset of the other agents. They won't be honest and upfront with me or anyone else about the company because they want to give everyone the illusion that it is a great company so they can add more people to the downline.

[kensmith]

Profit sharing is money that would have gone to the owners and instead they give it back to agents. If you don't want to earn money this way all you have to do is not actively recruite. Most agents don't do any recruiting they just sell homes. Again, it's the owners money/profit being paid to the agent that spent the time to help recruit.

As a new agent it doesn't surprise me that you don't ses the value in KW, you haven't dealt with other companies yet.

As for Junk mail...it's called keeping in touch with past and current clients. If you don't you loose out on future business. Again you are new so no big surprise that you don't understand this. Just to clairify though...They do not say to use a 33 touch for your entire database, just those that you have met. For most people that is a few hundred people and those people can easily make you 50k plus. If you actually have a met database of 2000 you will close hundreds of transactions a year following the system and you would wish you had 10,000 people to mail to. Plus of the 33 not all are supposed to be mailers, some should be face to face and some phone calls so your costs are even lower tahn what you put out there. This isn't anything new and you can go pay thousands to hear this exact same thing from Brian Buffini or others trainers...you just happen to get teh training for free at KW.

Referring, I have never heard anything like this and I have been with KW for 3+ years now. Maybe it's just your office.

Your own property. This is an office by office decision. Our office allows agents to buy and sell their own home and investments. As a side note there are many offices that don't allow this as there is a huge increase in the chance for an E&O claim. Some E&O policies actually exclude all personal transactions, something to check on.

Floor time, this is the biggest joke in the industry. The office uses your listings to get calls into the office then lets other agents take those calls. Once you start producing you will understand why floor time isn't a good thing.

Basicly it comes down to you don't want to follow a proven model that has helped many agents make a lot of money. Instead you are putting out bs and blamming the comapny for the fact that you can't cut it. Might be better for you to go to another company as the "poor me" types are cancer to any office.

[sfbay]

Profit sharing is money that goes to the people who recruited you, and the people who recruited them, albeit through a middleman (the broker). True you don't have to recruit to be successful at KW, but you are making your recruiters rich from your work (not theirs). Seems to me at KW, the goal is to recruit enough people to sell real estate so you don't have to. This is why the high producers don't hold their own open houses. All they want to do is get the listing agreement signed and then use the new recruits to get it sold without doing any work.

Maybe it's just my office, but I was told to put everyone on a 33 touch program (in a farm). I wanted to just do a farm with the 12 direct program, but people in my office said it should be 33 touch.

The training isn't free at KW. This is one of the biggest myths I have ever heard. The few that are offered for free are just vendors trying to sell a product. They aren't really training, but rather sales presentations. The only training classes I've been offered are Camp 443, Buyer's Clinic, Lead Generation, Listing Clinic, and family reunion which cost $85, $149, $149, $199, and $499 respectively. There are some others in Austin, which I know very little about, which cost around $500 or so.

Floortime makes a lot of sense to me. If you are a high producer losing a lot of calls for your listing to floortime, just buy your own signs with your personal number or IVR (like you are required to at KW anyways).

And you're right I haven't been to other companies, but I do have friends and family in real estate from other companies. Seems to me that KW just isn't a match for me. I'm looking to work a lot harder in real estate, and a lot less (i.e. zero) in multi level marketing.

[Thesa]

I know nothing about KW - other than when they would hire a real estate speaker I use to work for and yeah we sold tapes and other programs...

But as for floor time.... a waste of time..... I would think you just do not work your floor time the best you can Ken.... this last year I have generated about $30,000 off floor time. Now from other threads in this forum that is more than some agents make all year.

I have picked up one buyer that purchased 3 count them 3 resort lots at over $350k each, an investor that bought a home for $144,000 then remodeled it and sold it with me for $246,000 and also purchased a home for $411,000 and has done a remodel on it and it is now listed at $939,900.

I would take your floor time anyday... if you are too lazy to work the floor I will take the time and make the money.

You never know when the big buyer will walk in.... I have another story for you a retired agent I know was on floor duty and had a guy in shorts, a polo shirt and a ball cap walk in and wanted to see some commercial property...

He bought a mall for his wife for their wedding gift.

What is the commission on $25,000,000 - and that was 15 years ago.

[kensmith]

Thesa, 15 years ago and today are very different time so that story means little.

As for you doing $30k from floor time, great. But that is $30k that should have gone to the listing agents, not a floor agent. Also is some areas there are still walkins, not in the Chicago area.

I used to have floor time at a RE/Max office I was with. In 6 months of taking all the floor time I could get there was only one person that called and he had a 490 credit score and hadn't even finished his chapter 13 bankruptcy (can't get a loan). So "not working it" wasn't the issue.

sfbay, Sounds like your office is WAY different than mine and most of the ones I have ever seen or heard about. We offer 20 or so trainings per month that are free. We do pass the exact cost of any training materials along to the agent, but that is minimal. The office isn't there to loss money. Also you can just go online and get a lot of training at KWU.

As for your office and the 33 touch thing, go read Millionaire Real Estate Agent by Gary Keller and follow that. No matter what office you end up with it will be a huge help to you.

IVR's aren't and can't be required. Remember you are an independent contractor and can do whatever you want. Heck I think there is maybe one agnt out of 100+ that has one in our office. Buying your own signs is, but this is a good thing as you get the business from your listings...you can easily get one buyer per listing if you know what you are doing.

Back to the profit sharing, You are missing a huge point. There is no money from you that goes to the person that brings you in. You have a max amount you pay the office and a nice split for a newbie. You aren't going to walk into another office and get the split you have with a max amount the office is going to take. Then of that amount the owners give back part of it to those that help them grow the business.

As for top producers not doing their own open houses, that is in ANY office. We have better things to do that sit an open house, plus many top producers don't deal with buyers. If you have any common sense you would understand that taking as many of these open houses as you can will help you get buyers and make some money. Personally I have my own buyers agents that sit my open houses and I haven't done one in over a year, but the last one I did generated 3 transactions and over 1 million in volume, not bad for a few hours work.

Again you are looking for someone to blame for your lack of success. Please change to another office and let us know how much business you do in the first 2 months there, and make sure not to count any of the business that you already have put in motion while at KW. By now you should have planted some seeds that will bring in income in the next few months, then again maybe you didn't bother to do that.

[Thesa]

Ken - so.... if a client walks in an inquires about a property - listed with another company you think I should feel guilty about giving him 100% representation?

As for going to the listing agent - I think I am from a different world... I tell my sellers straight up that it is my job to represent them 100% - if I bring a buyer to the table - I will refer them to another agent in my office. In Oregon dual agency is allowed - but I find it completely wrong to represent both sides in a transaction where there are any negotations involved.

As for 15 years ago and now... you are right there is a difference - that property would be worth a ton more today and the same buyer could walk in your door.

Floor time with my office is not mandatory - but if you choose to do floor time you do have a schedule - being in a resort community and one of the fastest growing areas of the US - I am sure I have a different take than you.

Wish you the best in your ventures,

[La Jolla Real Estate]

Floor Time...it can be productive. You can do just as well going to a weekend bbq or turning chance encounters into business running your weekly errands. Just a matter of how you choose to spend your time.

I would say to focus your efforts towards capturing the online buyer. Or working your referral base.

LJRE

[cody]

I just took my test the other day, and am awaiting the results. I too was thinking of going with Keller Williams, and have already attended some meetings, and training classes. Pretty much everythign sfbay said was already in the back of my head, and he pretty much confirmed the fears I had of working at that agency.

I have still not decided where I would like to go, but this is very concerning for me, as I am totally against pyramid scheme type deals.

[LoanDoctor]

I can't say I know much about Keller Williams in terms of recruiting and training, what I can say is that I know a lot of successful agents that work for Keller. Let the numbers speak for themselves. Lock onto someone who is successful in your office, and be their shadow. Don't reinvent the wheel. Maybe your answer is to find another office (Keller or not) that fits you better. You are too new to know the differences, that is why these forums are so helpful.
As far as the recruiting goes, almost every company in America, not just in Real Estate, give bonuses for bringing on employees. It is the cheapest form of recruiting for them. I get 5% from anyone I bring in, (I work on the lending side by the way) and I view that as a nice incentive, but I don't let it drive my business. If I see someone who is qualified, and I wouldn't mind working with, I am more than happy to bring them in. The fact that the company will pay me for that, is a nice bonus, but is not a reason to bring someone on board. View it that way, and you should be fine with it.

[cody]

well I passed my test first time :), but I'm still a little weary of the keller williams agency after reading this post. I'd like to hear some more input if anyone has any. Also SF guy I emailed you but have not heard back.

[MileHighAgent.com]

Wow!
What a great thread!
I am a Keller Williams Agent in Denver - an agent who has shopped every agency and am staying put!
San Fran - I think you are in an odd office - I was a KW agent for a year - selling like gangbusters and had suggested two new agents join our office before I even looked in to the definition of profit sharing...actaully, I still haven't really read up on it. It's my general understanding that you'd need to have quite a large number of recruits under you to actually see much of a profit. I really feel your office is focusing on a very odd angle. I'd recommend looking at other KW offices in your area.
My office offers floor time on a first come - first served basis...in an office of over 300 agents - there is always available floor time. I personally I have never taken advantage of it.
Keller Williams offers all sorts of training (some free and some not free). I personally don't mind paying for classes as the classes I've paid for have made me far far more $$ than I paid for the class.
I am at Keller Williams because
1. my Broker is amazing
2. the "family" atmosphere is strong: I have referred many deals to other KW Agents around the country and have always known my referrals were taken care of by trained professionals
3. again, the people - really, you'll find KW Agents are ethical and good people
4. financially, the split is fair and there IS A CAP on the split - many companies don't cap their split
5. KW is a nationwide company and provides name brand recognition
6. Signs - if I choose, I can list just MY name and MY phone number - so that all of my sign calls come directly to ME
7. As long as the Keller Williams logo and office is listed on my sign, I can change the look of the sign (color, etc) - many other agencies require the office number is listed larger than the agents direct number - etc.
8. I could go on and on

SanFran, I think you should maybe speak to KW agents in another KW office to see if the focus is less on profit sharing and more on selling real estate - I think you'll be pleased with KW in the long term. I'm sorry you're having a negative initial experience.

Please let me know if I can help!

Dawn Tieken
Keller Williams - Park Meadows - Littleton, CO
www.MileHighAgent.com (http://www.MileHighAgent.com)

[OregonLO]

Well, I don't know many agents at Keller Williams so I am no help there but as for floor time even as an Loan Officer floor time isn't a bad thing. People randomly call. I had one guy randomly call in and it turned into a 600k deal which isn't too shabby just to answer the phone. Another person who called in has referred me 3 clients even though I couldn't finance her. If I wasn't in the office, then I wouldn't have gotten those. I'm sure I could do okay with just doing it on my own but that is like free money....haha

[jm0320]

My sister in law's uncle works for keller williams here in TX. I had no idea until we were both at a family dinner. I chose to enroll in licensing classes via the internet weeks before.... not the point. the point is, thanks for your input on kw. there are a few things i wondered about with kw that my connection did not answer ( i didn't ask in the time i had with him). he chose kw because of the profit sharing. residual income is important in the long run. i'm not shy about working hard for my own sales, but knowing i can get a "pay off" for my efforts to cultivate additional agents is very attractive. additionally, the way my connection put it, is that he would be my "sponsoring agent," working with me to cultivate my knowledge and success. if that's true, why shouldn't he, and (consequently, my future self) reap the rewards of his investment-my success.

i've had pressure on me to join pyramid schemes many times before, and never fallen for it. this feels different. i still have quite a bit of research to do on other agencies. coldwell banker and remax have been suggested many times over.... good luck.

[MileHighAgent.com]

Thank you Texas for your great post!

To add to you point about the person who recruited you helping you tremendously - maybe partially because you're in his/her downline. I brought a new agent on this month and after I did - I was pleased to find out (I'm the one who didn't know what KW Profit Sharing was) that all of my suggestions on the best RE school to attend, what types of advertising she should invest in, giving her free software and tools I'd invested in, showing her how to use the MLS, showing her how to do an Open House - it's all going to pay off (for me too! what a great surprise) because I'm sure she'll be successful and I know she's got a head start! I love the incentive I'm getting from KW - an incentive I wouldn't get at any other company - for doing what I was already doing for a friend. Again, this incentive to contribute to those in your downline is not at all the reason I'm at KW or stay at KW - just a great bonus on top of all the other reasons: great people, amazing nationwide support, education, resources, etc.

[IdahoHomeSeller]

It's great to hear some many different views on one idea. I also just began my real estate career recently and went with a network marketing-based marketing firm.

I have been approached by my share of network marketing companies selling everything from detergent to legal service (all reputable companies, BTW.) and never acted on these invitations. However, when I looked at Global Realty Marketing (GRM) and its compensation package but more important "the opportunity" to be able to increase my earnings, not solely based on my own production, but because of a team that I have build and helped - I could not pass it up.

And sure, network marketing is not for everyone. Keller Williams and ExitRealty (both these have override packages) are very reputable companies that want to stay vaible and reward their people. Not everyone wants to recruit people. Many just want to dedicate themselves to listing and selling homes. That is great!

However, for those that see the advantage of building a team and having the possibility of double or triple their income, receiving a commission check whether they have a closing or not, even earn a commission on mortgages, you might want to look into Global Realty Marketing or Keller Williams.

I apologize that turned into a plug for GRM. But in realilty, all RE companies are different. You just need to find the one that you has what you need and work their system. You'll be successful.

BTW, if you'd like more info on GRM, please email me through the forum.

[k3nn3th]

Thanks for the info about KW. I have an appointment with them next week for interview. You just save me 2 hours of driving time.

[bongboun15]

sfbay,
I noticed you're in San Fran. I just joined a no split company. If you are motivated, self-starter, and do your own marketing, I think this company would be great for you. I like the fact, that you do not have to recruite. You pay a flat fee of $795 per transaction, and $700/year for the E/O.
For the morgage side is $595 per transaction.
You can buy, sell your own home. If you interested email me at bonniesam4@aol.com. The company is in Pleasanton. It is close to where you are now.