The document discusses how paradigms in the real estate industry have shifted over time, from the traditional brokerage model to franchising to 100% commission structures. It argues that current models are broken and do not address the challenges of today's market conditions. The document promotes Nextage Realty as ushering in a new "WE" model that is structured to thrive in the current economy by focusing on teamwork, strong support systems, training, and residual income potential through recruiting and retention.

1. 1 The Real Estate Paradigm Shift: Real Estate’s “Next Age” ©2010 Nextage Realty International • NextageRealty.com

2. Paradigms are a belief system – the way we view different aspects of the world in which we live and operate. Our paradigms shape the way we do business and make decisions. Paradigms are usually difficult to change, and often times restrict our ability to see coming trends and embrace new market innovations. 2 Paradigms

3. 3 Typical Paradigm Shifts Horse & buggy The Automobile Trains Airplanes Radio Television Paradigm shifts continue today Paper Books Digital Books Videos Online Rentals Real Estate Franchising, 100%, Revenue Sharing

4. Visionary Courageous Risk-Takers Thick-Skinned Leaders A Bit Crazy? Are You an Agent FOR Change or a Victim OF Change? 4 Traits That Define the Paradigm Shifters

5. The real estate industry has been evolving for more than four decades, seeking to find a “better way”. But in the past few years the pace has accelerated significantly as the challenges presented by current market conditions expose the shortcomings of the existing business models. 5

6. The time has come to shift business paradigms and move the industry into its next age - operationally, structurally and professionally. 6

7. “Real estate has never experienced such a ‘perfect storm’ of events and factors, which have combined to force wrenching, dramatic changes upon a staid industry not accustomed to dealing with such seismic shifts.” - Michael McClure, CEO, Professional One Source: Swanepoel Trends Report 2010 7 The Perfect Storm

8. Until the 1960’s the real estate industry remained largely unchanged – relatively small brokerages with a few agents focused on a particular segment of a larger market. Then came… 8

10. Developing their own sales training programs

11. Establishing their own pre-license schools to improve recruiting efforts

12. Building offices with large numbers of agents9

14. Providing coordinated sales training for all agents

15. Coordinating group advertising in local markets to create greater exposure

16. Offering recruiting focus and pre-license training to increase agent population10

18. High producing agents received as much as 60/40

19. Brokers paid for most marketing and operational expenses for agents

20. Most agents were loyal and movement from one company to another was rare11

22. Agents pay a flat monthly fee (desk fee) plus their own expenses & keep all or most of the commission

23. Agents begin branding themselves at the expense of the company as the marketing emphasis shifts from company to agent – “WE” to “I”

24. 100% companies offer little support to agents as agents operate almost independently from company12 The Evolution of the Real Estate Industry

26. Agents receive very little to no broker support

27. “Everyone for himself” – against everyone else

28. Little to no camaraderie

29. No company loyalty

30. Ultimate example of the “I” World13 The Evolution of the Real Estate Industry

32. Very popular as agents search for income beyond personal production14 The Evolution of the Real Estate Industry

34. Very popular as agents search for income beyond personal production15 The Evolution of the Real Estate Industry

35. Can these models help brokers and agents meet the challenges of the industry today and in the future? 16

37. Their own production is limited to their available time and energy

38. Continued pressure to perform leads to burnout

39. Not really ”building a business, just “doing” business – income stops when personal production stops

40. Offices are closing because agents are leaving for other industries due to a reduction in income 17 Challenges for today and into the future

42. Agent Retention – Agents are continually enticed to join other companies with higher commission splits or lower desk fees creating huge agent turnover

43. Brokers lose quality agents that open their own brokerage business - thus training their competition

44. Agents are competing against each other rather than working as a team

45. Desired company profitability is difficult to achieve18

46. Most industry leaders agree that the current real estate business models are broken and no longer work for either brokers or agents. 19

47. What are the experts saying? “I don’t think a pure brokerage play as a business strategy is a viable play in this economy or going forward.” — Ron Peltier – President & CEO, HomeServices of America Source: Swanepoel Trends Report 2010 20

48. What are the experts saying? “In cases where their franchising is faltering, the culprit is most often that the models of the real estate company are not suited for these times.” — Byron Ellington – Chief Products Officer, Keller Williams Realty Source: Swanepoel Trends Report 2010 21

49. What are the experts saying? “[We are seeing a] decline in the number of ‘big box’ real estate office operations, which simply cannot survive given the high overhead levels typically associated with such large operations.” — Michael McClure – CEO, Professional One Source: Swanepoel Trends Report 2010 22

50. “Brokers need to change their business model NOW.” — Sherry Chris – Better Homes & Gardens Real Estate Source: Swanepoel Trends Report 2010 23 What are the experts saying?

52. The real estate business model continues to evolve – constantly searching for a way to deal with the realities of today’s market and the challenges of tomorrow

53. Historically independent regional brokers are moving towards franchising

54. NAR now provides much of what franchisors used to

55. Other vendors and suppliers have also filled many of the gaps in tools, training and support24

57. Fewer franchises, fewer agents…and lower profits, if any

58. Trouble justifying the royalties paid by franchisees and agents

59. Many franchisees and agents now question the value of the brand name – which most feel is the only real value they’re receiving from their affiliation with the franchise25 How have the traditional real estate franchises reacted to the challenges?

60. Are these the solutions - the proper and necessary paradigm shifts that will lead the evolution of the industry into its next age? Is there a business model that will address the challenges? 26

62. 100% models struggle with changes in market conditions – cyclical nature of the business

63. Profit sharing models can only share profit when there is profit

64. Residual income potential in revenue sharing models must be large enough to be enticing

67. Nextage Realty is built for the future of real estate!

68. Nextage Realty’s model is leading the evolution of the real estate industry!29

70. Strong Training Systems & Mentor Program

71. Team Atmosphere

72. Recruiting Solutions – National Team Building

73. Retention Program

74. Unlimited Earning Potential

75. Predictable Residual Income

76. Consumer-Centric Focus30 Now…Is The Future of Real Estate

77. 31 There will NEVER be a better time. NOW IS THE TIME! ©2010 Nextage Realty International • NextageRealty.com