LONG _ FOSTER Vulnerabilities

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2011 CENTURY 21 Recruiting
                                                         Table of Contents

         Company History ............................................................................................................. 2

         LONG & FOSTER Vulnerabilities .................................................................................... 5

         Questions Agents Should Ask ......................................................................................... 6

         LONG & FOSTER Myths/Realities ................................................................................ 10

         Sources - Myths/Realities.............................................................................................. 12

         National Company Comparison ................................................................................... 13

         Local Office Comparison ............................................................................................... 14

         Examples of Commission Schedule ....................................................................... 15 - 19

This document is for internal use only and not to be distributed outside the company. Information in this document has been gathered through company
websites and interviews with former agents of LONG & FOSTER, may not apply to all LONG & FOSTER offices. The views expressed in this Guide are
                                                        not necessarily the views of CENTURY 21.

         LONG & FOSTER International Myth/Reality Guide 2011             1                                    CENTURY 21 RECRUITING
                                     LONG & FOSTER History1
Company History:
    Based In Virginia----Claim to be the largest privately owned Real Estate company—Been in business
since 1968 , started by Wes Foster and Henry Long .(I believe Henry Long passed away) Jeff Detwiler is
President and operates company day to day. They are very much tied into the Government being that
much of their growth has been in DC area and the former operations head works in the White House in
the Dept of Housing (HUD) They operate approx 200 offices with 16,000 agents almost exclusively in the
Mid Atlantic states (Virginia, Maryland, Washington, D.C., Pennsylvania, New Jersey, West Virginia,
Delaware, and North Carolina)..

They operate a Mortgage company (Prosperity Mortgage), a Title Services company (Long and Foster
Settlement services) and an Insurance arm (Long and Foster Insurance agency) They also have a vacation
rental arm that operates mostly in Maryland and Delaware shore .

They operate with 7 regions (broken down by states or portions of states) which then in turn manage
district managers and then the individual offices

They have acquired some regional companies over the last several years to grow and tout their “Training
academy” as one of the best in the Industry. They are a traditional brokerage in most offices with varied
agent splits and commission schedules.

They have a staff of over 200 incl 70 technical support people that assist agents and the field offices
with leads, data and transaction support

    -Wes Foster – Co-Founder & Chairman
    -Henry Long – Co-Founder &Vice Chairman
    -Jeff Detwiler – CEO
    -David Stevens – COO
    -Barry Redler – CMO
    -Gary Scott-President of Real Estate Brokerage

Number of offices: 200
  -Areas of highest franchise growth in US: Texas, Carolinas and Florida
  -Areas of highest franchise growth internationally: Italy, Portugal and Czech Republic
Number of agents: 13,700 (2,500 joined Long & Foster in 2010 alone)

Number of countries: 1


   Traditional Brokerage services

   Solid training in the beginning breeds success in the end.

LONG & FOSTER International Myth/Reality Guide 2011   2                             CENTURY 21 RECRUITING
Value Proposition:
   Through training and coaching, success can be achieved. Offer:

        Stellar Reputation

        Financial Stability and Growth

        Superior Training

        Income and Support Services

        Powerful Marketing (9M unique visitors in 2009, 25% increase over previous year)

        Cutting Edge Technology

        1-Stop Real Estate Services

             o    Relocation

             o    Insurance

             o    Mortgage

             o    Home Service Connection

             o    Settlement Services

             o    Title Services Company

             o    Vacation Rental Company

        More award winning, million dollar sales associates than anyone in the market place

        More top producers transfer to Long & Foster than any other office in any of the areas.

        Top producer retreats and exclusive networking events

        Free career counseling with proven winners

        22% Market Share, next closest 7.43% (DC, Washington, Maryland, Virginia, West
         Virginia and Pennsylvania)

        Buffet Style Compensation Programs that fit any agents desire

        The largest privately owned real estate company in America

        51.5B for Entire Company

             o    Long & Foster Real Estate 25.3M

             o    Prosperity Mortgage 6B

LONG & FOSTER International Myth/Reality Guide 2011   3                      CENTURY 21 RECRUITING
             o    Insurance 5.1B

             o    Settlement Services 12.7B

             o    Mortgage Corporation 2.4B

Corporate Social Responsibility:
   COO, David Stevens is Assistant Secretary of HUD and Head of FHA

   -Corporate web site: Yes (
   -Intranet site: Yes (Intranet Cafe)
   -Foresee Results: Online Consumer Satisfaction Survey Company
   -Sharper Agent

Corporate logo:
   Long & Foster white over red

   (adopted in 1978 with tagline, ‘The Total Homeownership Experience)

   -University of Long & Fosters School of Career Development

   -House own private Real Estate School

LONG & FOSTER International Myth/Reality Guide 2011   4                  CENTURY 21 RECRUITING
                                LONG & FOSTER Vulnerabilities

        Not a national company, can’t bring national buyers and sellers to the table
        Not an international company, can’t break into markets that are now being consumed by these

        Regional name recognition not international name recognition.

        Marketing dollars per lead must higher and budgets are limited.

        Does not appear that they have a lead routing system.

        Long and Foster charge a royalty fee (5%)

LONG & FOSTER International Myth/Reality Guide 2011   5                            CENTURY 21 RECRUITING
                  Questions Agents Should Ask LONG & FOSTER
What monthly fees will I have to pay?

         -Administration fee
         -Desk fee
         -Email fee
         -Long distance
         -Phone line fee
         -Black and white copy fee
         -Color copy fee
         -Advertising fee
         -Technology fee
         -Participation fee
         -Storage fee
         -Franchise fee
         -Transaction fee

        What are the upfront fees to join the company?

        Am I charged fees once I sell over a specific amount?

        Do I have to pay a fee even if I don't have any sales?

        I’ve heard that with most of your company’s contracts there are provisions where you
         can put a lien on my home if you claim that I owe you money. Is that true? (If yes) Isn’t it
         also true you could hit me with all filing costs, court costs and attorney’s fees, in addition
         to any money you may claim that I owe you?
         Does your contract specifically state the terms and conditions of what you could do to
         me if you decide to put a lien on my home? (If yes) May I have a copy of the terms and
         conditions for my attorney to review? (If no) Where is the lien provision in the contract?

        I feel that this penalty is far too severe of a consequence if I were to for some
         unforeseen reason owe you money. Will you stipulate in the contract that this will never
         be a recourse you would use on me if I did owe you money? (If not) Why not? My
         current company would never do this to me, aren’t you suppose to be the freedom and
         independence company?

        Why do I have to sign a contract that forces me to pay rent payments for one year? Can
         I sign for three months? (If no) Why not?

        I’ve heard that the only way that I can be released from your mandatory twelve month
         contract is with a sixty day written notice from me to you that I’m leaving, is this true? If I
         were to leave immediately after notifying you, why would you force me to pay sixty days
         rent if I’m not here? I’d like to have the sixty-day harsh penalty removed from the
         contract; will you do that for me? (If not) How about thirty days?

LONG & FOSTER International Myth/Reality Guide 2011   6                           CENTURY 21 RECRUITING
        Questions Agents Should Ask LONG & FOSTER (continued)
        I’ve heard that if I were to leave your company at any time prior to the completion of the
         mandatory one-year contract that I would have to pay you, upon leaving the company,
         the total amount of the cumulative free rent and rent for the sixty-day notice time frame,
         is that true? (If yes) If you gave me the three months free rent for joining you and I had to
         pay you for the sixty days as well, if my monthly rent was $1,000, wouldn’t that mean I’d
         have to write you a check for $5,000 if I decided to leave after three months? (If yes)
         Why would you do that to me? Will you take that provision out of the contract you want
         me to sign?

        What is the late charge on my monthly bill? I’ve heard that your company charges 18-
         20% interest in addition to high late penalties if for some unforeseen reason I can’t pay
         on time. Why is this interest rate so high? Will you lower this if I joined your office?

        What are my assurances that my desk cost will not escalate next year?

        How many of your agents are on the RAPP, “deferred cost-stress free” plan vs. the
         standard “full cost-stress” plan?

        Will you provide me with a detailed, itemized, written list of what expenses are covered
         under each plan and what expenses are not covered?

        Will you give me a detailed breakdown of where my money is spent on a monthly basis?
         Will you give me copies of actual expenses that you incur?

        If the office needs additional or replacement equipment, support staff, etc., what are my
         costs? Are they limited and is this in writing?

        If the number of agents increases, do my costs and expenses go down like they should?
         (If not) Why not? (If so) When?

        (If under “stress-free” program) Why is there a security deposit? Did everyone pay this?
         Do I earn interest on my deposit? (If no) Why not? It’s my money, isn’t it? Do you spend
         my security deposit or is it held in an independent escrow account, as it should be?
         Have you ever waived this for anyone in your office?

        (If under “stress-free” program) What is this “initiation fee” and is it refundable if I leave?
         Have you ever waived this for anyone in the office? Do other offices in the state ever
         waive this fee?

        (If under “stress-free” program) What is this monthly “administrative fee”

        I’ve heard that other surrounding offices associated with your company charge less for
         desk space and regional expenses than you do. Why do you charge more than they do?

        Who decides where my “shared expense” money is spent? Do you? Do the other
         agents? Is it both?

LONG & FOSTER International Myth/Reality Guide 2011   7                           CENTURY 21 RECRUITING
        Questions Agents Should Ask LONG & FOSTER (continued)
    Commissions and other related items:
        Can I negotiate my commissions w/ Buyers/Sellers? If so, is there a penalty for doing
         so? How is the split handled if the fee is negotiated down?
        How do your commissions splits work?
        What commission will you offer me?

        May I see a copy of your commission plan?
        Will my commission change at the end of every year and start over at the beginning of
         each year?

        How many agents achieve 100% commission plan?

        One of the messages that your company sends out is that if I join you, “I’m my own boss,
         running my own business”. If I leave, for any reason, do you immediately release all of
         my listings to me and my new office? Who gets my listings? Do I receive a commission
         if each sells?

        Will you give me a printout (names deleted) of 12 months expenses from similar
         production level associates in your office?

        (If under “stress-free” plan) What would my starting commission split be? 70/30 or
         80/20? How much do I have to pay you in company dollars before I “graduate” to the
         maximum costs stress plan?

        With all of these new expenses that I would incur if I joined you, what would my TRUE
         vs. FACE VALUE commission split be?

    Benefits of joining
        Do I get my own desk?
        Do I have to have a certain production to get a private office?
        Does your telephone system have the ability to page me when I have a message on
         voice mail? Is there a charge for voice mail?

        Does your phone system follow me when a call comes in and I’m out of the office?
        Are hook-ups DSL,T1 or modem?
        Do you have any kind of retirement program? If so, please explain.

        Do you have any kind of health insurance program? If so, please explain.
        How many computers/printers/fax/copiers are available to the agent?
        Do you offer email to the agents?

LONG & FOSTER International Myth/Reality Guide 2011   8                       CENTURY 21 RECRUITING
        Questions Agents Should Ask LONG & FOSTER (continued)
    Office Culture
        What type of career path can you offer me?

        Do you have a marketing plan? What is it?

        What type of support will you provide me to get started? Is there a ramp up period?

        Is there a minimum I need to sell every month/year?
        Average production per agent in this office?
        Do you/your managers also list/sell and possibly compete with agents?

        Do you offer regular office meetings? Do you provide us with trends, competitor info,
         issues, etc?

        Explain how your lead referral system works?

        How many leads do you generate per month?

        What does this office do to help generate leads for agents?

        Tell me why I should choose you over a competitor? What things separate you from
         your competitor?
    Please describe your training program and costs for:
        New agent training
        Experienced agent training

        Do you promote designations and if so do you share in this cost?
        Do you pay for any outside training?
        Do you have a relocation department?

        Who is your company affiliated with?
        How are relo leads distributed?
        Are there qualifications to receive referrals?

        I’ve heard that your company puts out a relocation directory and that agents have to buy
         space in, how much does that cost me and how many of your agents are in it?

LONG & FOSTER International Myth/Reality Guide 2011   9                     CENTURY 21 RECRUITING
                         Myths/Realities About LONG & FOSTER
Commission & Fees
Myth:    LONG & FOSTER agents keep the maximum allowed amount of their commissions “I
have a 90% or 100% commission split”.1
Reality: LONG & FOSTER must now charge a 5% franchise fee (1% goes to region and 4%
goes to LONG & FOSTER International). They don’t tell you about the office fees for doing
business - desk fees, manager’s fees, photocopy and office supply fees, or you may have to
wait to reach a level before you can even get bumped up. There are many hidden fees such as
desk, phone, fax, photocopy, etc. In a bad economy such as this you still have to pay fees
when you make nothing. When the market is good you still have to share that money with all
the agents in the office.

Myth: I can/do make more money at LONG & FOSTER.
Reality: Your split may be more BUT look at what else you may be paying for (royalty fee,
office fees, annual fees, advertising fees, etc). 20% of agents do 80% of the business and 80%
of agents survive on the 20% that is left. Your split may be more BUT look at what else you
may be paying for (office fees, annual fees, etc). Also, office culture is very competitive and you
have to compete for business with other agents, brokers and nearby offices.

Myth: LONG & FOSTER is a great place to further my career.
Reality: LONG & FOSTER still trails Century 21 in brand name and company size according
to the 2007 Millward Brown Study. LONG & FOSTER is famous for the ‘every man for himself’
mentality so it’s difficult to progress in this type of environment.

Myth:    LONG & FOSTER allows their agents to make their own decisions on commissions,
office structure, etc.
Reality: Be careful of promises of “Independence” which can mean little to no guidance and
support. No team environment, regular office meetings or staff to assist you with listing
presentations and other help you may need. No office structure means no leadership or
direction. Who makes sure agents are aware and adapted the latest technology, tools and
trends, and if not then who makes sure they are trained? Who voices concern for the office or

Myth: LONG & FOSTER is the leading brand.
Reality: According to the 2010 Millward Brown study, LONG & FOSTER didn’t even make2 the
survey. CENTURY 21 is #1 in Brand Awareness and Most Recognized name in real estate

by cell phone, then tracks and monitors the life of the lead and finally analyzes in real time.
Myth:   LONG & FOSTER has the industry’s best training via satellite network, online and
 Reality: Training varies by region and there is no corporate mandated training. Most training
is paid by the agent. Training is not interactive only online. Little to no mentoring or coaching
unless you pay for it.

LONG & FOSTER International Myth/Reality Guide 2011   10                       CENTURY 21 RECRUITING
                   Myths/Realities About LONG & FOSTER (continued)
   Myth: You’re in business for yourself not by yourself
   Reality: At LONG & FOSTER you’re in business by yourself, there is no support or backup
   system. At CENTURY 21 you get ongoing support at the corporate, regional and office level.
   Myth: At LONG & FOSTER you are free to build your own personal sales team.
   Reality: Agents can build their teams with assistants but usually have to pay LONG &
   FOSTER a yearly fee for this which can become costly.
   Myth:    LONG & FOSTER agents have the freedom to be creative with unlimited promotion and
   advertising to generate a continual stream of qualified prospects.
   Reality: Agents pay into an advertising fund but end up paying for any local advertising they
   Myth:    At LONG & FOSTER, you have complete control of how much of your income you put
   back into your business and how you allocate business expenses. 4
   Reality: With all the fees and business expenses you are charged, your final take home
   income is a lot less. How can you have complete control of your income and expenses with a
   shifting of the market and office size that will directly affect your monthly expenses and therefore
   how much income you put back into your business?
   Myth:    Agents benefit fully from business-expense tax deductions. The maximum commission
   concept means agents don't immediately lose a percentage of income - and the tax deductibility
   of that "expense" - to a broker. 5
   Reality: In order to deduct expenses you must spend money. The average you end up
   getting back from the government is about $0.40 for every $1 spent.
   Myth:   More professionally managed office and administrative support. Have peers that are
   your equal
   Reality: Often you must pay for administrative help or share with everyone else in the office.
   Other peers in the office can feel threatened and not be so willing to help or share with you.

*The myths/realities referenced in this document are statements made on, regional LONG & FOSTER
websites and written documents given to prospective recruits, former LONG & FOSTER agents, office managers and brokers. They
are also taken from interviews with former LONG & FOSTER agents and Jim Gilreath Seminar. The myths/realities do not reflect the
opinions of Century 21 Corporate.

   LONG & FOSTER International Myth/Reality Guide 2011           11                                   CENTURY 21 RECRUITING
                                                 Sources – Myths/Realities

    Benefits and Competitive Advantages of LONG & FOSTER Affiliation –

    2010 Millward Brown Study

    Benefits and Competitive Advantages of LONG & FOSTER Affiliation –

    LONG & FOSTER Independent Contractors Agreement

            LONG & FOSTER International Myth/Reality Guide 2011   12                              CENTURY 21 RECRUITING
                                      National Head to Head Comparison
                                      CENTURY 21 and LONG & FOSTER


    Universal Brand Awareness1                                                         94%                      Did not chart

    Name recognition2                                                                  41%                      Did not chart

    International referral system                                                      YES                             NO

    Internationally recognized signs                                                   YES                             NO

    National TV advertising                                                            YES                             NO

    National and regional conventions                                                  YES                            YES

    State of the art marketing tools                                                   YES                             NO

    National client follow up program                                                  YES                             NO

    FREE website                                                                       YES                             NO

    Awards and contests                                                                YES                            YES

    Lead Routing System                                                                YES                             NO

    Free contact management system (21online)                                          YES                             NO

    “How to” videos for learning                                                       YES                             NO

 * Source: 2010 Ad Tracking Study, Millward Brown. Q: ““Please tell me which of these real estate agencies you have ever seen or heard
of?” (Base: 1201 respondents: Sold or purchased a home in the past 2 years, or plan to sell or purchase a home in the next 2 years;
results significant at a 90% Confidence level).

2Source: 2010 Ad Tracking Study, Millward Brown. Q: “Which of these agencies , if any, is the most recognized name in real
estate?” (multiple choice question); Base -Aware of Brand. Results significant at a 90% Confidence level .

May not apply to all Keller Williams regions or offices.

    LONG & FOSTER International Myth/Reality Guide 2011                  13                                       CENTURY 21 RECRUITING
      Your Local Office Head to Head Comparison(please customize)

                       Programs                                                                       .

                                                           Local C21 Office   Your Local L&F Office
Sales training in this office held continuously

Mentor training program

Computer network desk connection

Company paid postage (farming)

Phone charges

E&O expenses


Commission splits

Color copier

Hidden (desk, phone, copier, rent, etc.)

Transaction coordinator

eCampaign Center (drip emails, eNewsletters)

Golden Ruler

My C21 website

Individual company awards

Search engine optimization

Community involvement

LONG & FOSTER International Myth/Reality Guide 2011   14                           CENTURY 21 RECRUITING
                                         Foundation Plan

LONG & FOSTER International Myth/Reality Guide 2011   15   CENTURY 21 RECRUITING
                                         Incremental Plan

LONG & FOSTER International Myth/Reality Guide 2011   16    CENTURY 21 RECRUITING
                                           Executive Plan

LONG & FOSTER International Myth/Reality Guide 2011   17    CENTURY 21 RECRUITING
                                            Platinum Plan

LONG & FOSTER International Myth/Reality Guide 2011   18    CENTURY 21 RECRUITING
                                       Entrepreneur Plan

LONG & FOSTER International Myth/Reality Guide 2011   19   CENTURY 21 RECRUITING

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