1 00:00:10,640 --> 00:00:14,800 Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast. 2 00:00:14,840 --> 00:00:16,120 Speaker 1: I'm Jill Wisenthal and. 3 00:00:16,079 --> 00:00:17,000 Speaker 2: I'm Tracy Alloway. 4 00:00:17,120 --> 00:00:19,800 Speaker 1: Tracy, we've been doing a lot on competition stuff lately. 5 00:00:19,960 --> 00:00:22,560 Speaker 2: Yeah, we really have. Let's see. So we spoke with 6 00:00:22,720 --> 00:00:26,080 Speaker 2: Lena Kahn from the FTC recently before that, we spoke 7 00:00:26,120 --> 00:00:29,000 Speaker 2: to the DOJ's Jonathan Canter. So it feels like we've 8 00:00:29,000 --> 00:00:32,199 Speaker 2: been making the competition rounds right. 9 00:00:32,200 --> 00:00:34,240 Speaker 1: We've talked a little bit about chicken too in a 10 00:00:34,280 --> 00:00:39,960 Speaker 1: few episodes. But competition more broadly is a good lens 11 00:00:40,040 --> 00:00:44,800 Speaker 1: to really learn about market structure across a range of industries, 12 00:00:44,800 --> 00:00:47,640 Speaker 1: because every industry is different, and every industry is different 13 00:00:47,640 --> 00:00:50,919 Speaker 1: centers of power and people who have information, people who 14 00:00:51,000 --> 00:00:54,880 Speaker 1: extract rents from that information, and so just in terms 15 00:00:54,880 --> 00:00:58,960 Speaker 1: of I don't know sheer curiosity about how different businesses work, 16 00:00:59,320 --> 00:01:02,400 Speaker 1: the sort of competition lens I find to be very 17 00:01:02,520 --> 00:01:03,640 Speaker 1: useful for getting to know it. 18 00:01:03,840 --> 00:01:06,560 Speaker 2: Oh, absolutely, And it's one reason why we keep asking 19 00:01:06,600 --> 00:01:09,240 Speaker 2: people from the FTC and the DOJ how they actually 20 00:01:09,280 --> 00:01:12,280 Speaker 2: do their research learn about industries. But I would say, 21 00:01:12,920 --> 00:01:15,880 Speaker 2: aside from that benefit, which is a major one, it 22 00:01:15,959 --> 00:01:19,000 Speaker 2: does feel like there is this kind of ground swell 23 00:01:19,720 --> 00:01:25,640 Speaker 2: of anti trust pressure or there's more of a examination 24 00:01:26,080 --> 00:01:29,520 Speaker 2: of anti competitive practices nowadays. And it does feel like 25 00:01:29,760 --> 00:01:33,440 Speaker 2: maybe the winds are shifting a little bit towards the consumer, 26 00:01:34,000 --> 00:01:37,200 Speaker 2: perhaps given the macroeconomic background. You know, we've seen a 27 00:01:37,240 --> 00:01:40,600 Speaker 2: lot of complaints about inflation, higher prices. Obviously, feels like 28 00:01:40,680 --> 00:01:44,319 Speaker 2: companies are in some respects getting more savvy about what 29 00:01:44,440 --> 00:01:47,480 Speaker 2: they're charging people. But then you also have companies or 30 00:01:47,520 --> 00:01:50,400 Speaker 2: industries that have kind of been doing the same thing 31 00:01:50,480 --> 00:01:54,200 Speaker 2: for a long time, but now people are looking at 32 00:01:54,240 --> 00:01:55,240 Speaker 2: it more critically. 33 00:01:55,920 --> 00:01:59,120 Speaker 1: Yeah, absolutely, that's very well put. It does feel like 34 00:01:59,240 --> 00:02:02,960 Speaker 1: across the economy you see this a lot where something 35 00:02:03,000 --> 00:02:06,880 Speaker 1: has been the norm for thirty forty two hundred years 36 00:02:07,320 --> 00:02:10,600 Speaker 1: and then for whatever reason, maybe there's more data, maybe 37 00:02:10,639 --> 00:02:13,640 Speaker 1: there maybe social media, maybe something, suddenly people wake up 38 00:02:13,639 --> 00:02:16,400 Speaker 1: and say, wait, is this fair? Is this right? Is 39 00:02:16,440 --> 00:02:19,160 Speaker 1: this optimal? Is this a good system? I think we 40 00:02:19,200 --> 00:02:22,120 Speaker 1: see it a lot in medicine for sure, where people 41 00:02:22,120 --> 00:02:25,680 Speaker 1: are like, wait, this is how it works. But and again, 42 00:02:25,720 --> 00:02:28,720 Speaker 1: you know, I mentioned we've been doing a lot on competition. 43 00:02:28,880 --> 00:02:31,519 Speaker 1: We've also been doing a lot on housing. Yes, and 44 00:02:31,600 --> 00:02:33,120 Speaker 1: so this is going to be an episode that is 45 00:02:33,160 --> 00:02:34,160 Speaker 1: sort of a merger. 46 00:02:34,360 --> 00:02:35,320 Speaker 2: Let's put the two together. 47 00:02:35,400 --> 00:02:38,200 Speaker 1: Let's put the two together and talk about competition in housing. 48 00:02:38,360 --> 00:02:42,480 Speaker 2: Yes, so, I'm sure listeners have probably seen some headlines 49 00:02:42,600 --> 00:02:46,480 Speaker 2: floating around about a recent federal civil case called the 50 00:02:46,520 --> 00:02:50,839 Speaker 2: Sitzer Burnett case. It was basically a civil lawsuit, and 51 00:02:51,080 --> 00:02:55,240 Speaker 2: it found that the National Association of Realtors plus two 52 00:02:55,520 --> 00:02:58,200 Speaker 2: large brokerages I think they were called Keller Williams and 53 00:02:58,280 --> 00:03:04,800 Speaker 2: Home Services of America conspired to keep commission costs artificially high, 54 00:03:05,160 --> 00:03:08,880 Speaker 2: and the jury awarded Missouri home sellers something like one 55 00:03:08,919 --> 00:03:12,280 Speaker 2: point eight billion dollars. But I've read that a judge 56 00:03:12,320 --> 00:03:15,880 Speaker 2: could in theory increase that to damages of as much 57 00:03:15,919 --> 00:03:18,519 Speaker 2: as five point three billion. And this has kicked off 58 00:03:18,560 --> 00:03:23,440 Speaker 2: a huge discussion about the future of the real estate industry, 59 00:03:23,480 --> 00:03:27,080 Speaker 2: which has historically made its money from these commissions, at 60 00:03:27,120 --> 00:03:28,480 Speaker 2: least on the brokerage side. 61 00:03:28,639 --> 00:03:31,160 Speaker 1: You summarize that very well, that was really good, and 62 00:03:31,320 --> 00:03:34,840 Speaker 1: this gets to something There are many aspects of real 63 00:03:34,960 --> 00:03:37,800 Speaker 1: estate brokerage that I just don't really understand, and I 64 00:03:37,840 --> 00:03:40,400 Speaker 1: don't really get what multiple listing services are. 65 00:03:40,520 --> 00:03:42,560 Speaker 2: Yeah, I'd never heard of that before I knew. 66 00:03:42,640 --> 00:03:44,720 Speaker 1: I mean, I was familiar with these databases. I don't 67 00:03:44,720 --> 00:03:47,240 Speaker 1: really get who owns them. I know that access is 68 00:03:47,360 --> 00:03:51,720 Speaker 1: very restricted. I don't totally understand. So I know you 69 00:03:51,760 --> 00:03:54,560 Speaker 1: have a buyer's broker, but then also you can go 70 00:03:54,640 --> 00:03:57,400 Speaker 1: on Zillow and find your own house or something like that. 71 00:03:57,640 --> 00:03:59,360 Speaker 1: At one point when I was trying to buy a 72 00:03:59,400 --> 00:04:03,080 Speaker 1: house or earlier this year, found something on one of 73 00:04:03,080 --> 00:04:05,600 Speaker 1: the sites, maybe with zillo. But then there's this broker 74 00:04:05,640 --> 00:04:08,320 Speaker 1: who emerged. I don't really get how all these pieces 75 00:04:08,640 --> 00:04:11,680 Speaker 1: fit together, but I do understand that if you have 76 00:04:11,880 --> 00:04:15,680 Speaker 1: access on some level to this infrastructure that is very valuable. 77 00:04:15,920 --> 00:04:18,359 Speaker 2: Well, here's the thing. It's one of those costs that 78 00:04:18,560 --> 00:04:22,360 Speaker 2: is substantial. I think the average is something like five 79 00:04:22,440 --> 00:04:26,400 Speaker 2: to six percent commission on a home sale price. But 80 00:04:26,720 --> 00:04:30,960 Speaker 2: because it's so baked into what you know, both sellers 81 00:04:30,960 --> 00:04:34,880 Speaker 2: and buyers are paying, it's never really broken out, and 82 00:04:34,920 --> 00:04:37,520 Speaker 2: I think people don't think about it that much. It's 83 00:04:37,600 --> 00:04:41,560 Speaker 2: just incorporated into the overall cost of either buying or 84 00:04:41,640 --> 00:04:45,320 Speaker 2: selling a house. But now people are starting to examine 85 00:04:45,360 --> 00:04:47,600 Speaker 2: it more closely and say, well, wait a second, how 86 00:04:47,640 --> 00:04:50,280 Speaker 2: is this all working, What are the incentives here, and 87 00:04:50,440 --> 00:04:56,040 Speaker 2: why has the average Commission been so remarkably stable across 88 00:04:56,080 --> 00:04:57,640 Speaker 2: literally a century. 89 00:04:57,800 --> 00:05:01,240 Speaker 1: I think so many questions that we need answers too, 90 00:05:01,279 --> 00:05:05,080 Speaker 1: because setting aside this one civil case in Missouri, I 91 00:05:05,120 --> 00:05:08,359 Speaker 1: don't think anyone knows how it's going to change the industry. 92 00:05:08,360 --> 00:05:10,720 Speaker 1: If it'll change the industry, we don't know the damages. 93 00:05:10,839 --> 00:05:13,440 Speaker 1: They're certainly going to be Appeals for these types of 94 00:05:13,440 --> 00:05:16,040 Speaker 1: things last for years and years, I think, And so 95 00:05:16,320 --> 00:05:18,159 Speaker 1: I don't think anyone really knows where it's going. But 96 00:05:18,200 --> 00:05:20,680 Speaker 1: it is a good moment to maybe back up and 97 00:05:20,760 --> 00:05:24,039 Speaker 1: get an understanding of the market structure here and what 98 00:05:24,160 --> 00:05:26,760 Speaker 1: could potentially change. Yeah, let's do it, Okay, I am 99 00:05:26,920 --> 00:05:30,440 Speaker 1: very excited. We have the perfect guest, Andrew Ghent. She's 100 00:05:30,480 --> 00:05:33,279 Speaker 1: a professor of finance at the David Eccles School of 101 00:05:33,400 --> 00:05:38,400 Speaker 1: Business at the University of Utah, specialist in this area. So, 102 00:05:38,920 --> 00:05:41,760 Speaker 1: Professor Ghent, thank you so much for coming on a lot. 103 00:05:42,120 --> 00:05:43,560 Speaker 3: Thank you so much for having me on the show. 104 00:05:44,080 --> 00:05:46,800 Speaker 1: Absolutely, how do brokers get paid? I buy a house, 105 00:05:46,960 --> 00:05:49,920 Speaker 1: I go on Zillow, I find something. I see a 106 00:05:49,960 --> 00:05:53,400 Speaker 1: bid seems cool. Somehow I come to an agreement. It 107 00:05:53,440 --> 00:05:56,760 Speaker 1: all seems baked in. How are individuals getting paid in 108 00:05:56,800 --> 00:05:59,560 Speaker 1: that transaction. In just the sort of standard. 109 00:05:59,160 --> 00:06:02,640 Speaker 3: Case, we have the basic intuition, right, you buy a 110 00:06:02,680 --> 00:06:08,479 Speaker 3: house and the seller agent and the buyer's agent, they're 111 00:06:08,520 --> 00:06:13,200 Speaker 3: going to split the commission, and before you even approached anybody, 112 00:06:13,640 --> 00:06:16,479 Speaker 3: that was set in the listing contract. So it will 113 00:06:16,480 --> 00:06:20,000 Speaker 3: say in the listening contract five or six percent typically, 114 00:06:20,080 --> 00:06:23,400 Speaker 3: and that will be split evenly between the selling agent 115 00:06:23,520 --> 00:06:26,720 Speaker 3: and the buying agent. So it's baked into the home 116 00:06:26,800 --> 00:06:29,440 Speaker 3: price right now. You know, for a very long time 117 00:06:29,760 --> 00:06:34,240 Speaker 3: National Association of Realtors effectively instructed its agents to tell 118 00:06:34,279 --> 00:06:36,680 Speaker 3: buyers it was free, so you may as well work 119 00:06:36,720 --> 00:06:39,520 Speaker 3: with an agent because it's free. And of course I 120 00:06:39,600 --> 00:06:41,880 Speaker 3: think a couple of years ago they finally backed off that, 121 00:06:42,120 --> 00:06:44,360 Speaker 3: so it's no longer claimed to be free. But you're 122 00:06:44,400 --> 00:06:46,520 Speaker 3: absolutely right, Joe, it's baked into the price of the house. 123 00:06:47,000 --> 00:06:50,560 Speaker 2: So just before we dig in further into commission structures, 124 00:06:50,600 --> 00:06:54,080 Speaker 2: can you walk us through all the various lawsuits that 125 00:06:54,160 --> 00:06:56,120 Speaker 2: seem to be floating around at the moment, because I 126 00:06:56,160 --> 00:06:58,680 Speaker 2: mentioned the one that's gotten the most headlines, so the 127 00:06:58,720 --> 00:07:02,680 Speaker 2: Sitzer Burnett one, but there are other things out there. 128 00:07:02,720 --> 00:07:06,160 Speaker 2: There's a Gibson case in Missouri. I think I saw 129 00:07:06,200 --> 00:07:10,840 Speaker 2: a headline about apartment brokers in New York also being sued, 130 00:07:11,440 --> 00:07:13,680 Speaker 2: and I guess I'm curious, like why these are coming 131 00:07:13,800 --> 00:07:19,880 Speaker 2: up as civil lawsuits versus something more federal or you know, 132 00:07:19,960 --> 00:07:22,280 Speaker 2: like more targeted from the DOJ or something like that. 133 00:07:22,320 --> 00:07:25,040 Speaker 2: I think the DOJ did have some sort of settlement 134 00:07:25,040 --> 00:07:27,720 Speaker 2: with the National Association of Realtors a few years ago. 135 00:07:27,920 --> 00:07:30,720 Speaker 2: But like, walk us through what this landscape of ever 136 00:07:30,840 --> 00:07:33,760 Speaker 2: multiplying lawsuits it seems actually looks like right. 137 00:07:33,640 --> 00:07:35,880 Speaker 3: Now, you know, this has been going on for some time, 138 00:07:36,120 --> 00:07:38,600 Speaker 3: and sort of the puzzle you alluded to earlier in 139 00:07:38,600 --> 00:07:42,520 Speaker 3: the show about why has this stayed sticky? We've had 140 00:07:42,600 --> 00:07:46,679 Speaker 3: this technological advancement where you know, thirty years ago wasn't 141 00:07:46,720 --> 00:07:50,720 Speaker 3: super feasible for you as an individual consumer to go 142 00:07:50,840 --> 00:07:53,960 Speaker 3: and find a home online and effectively, you know all 143 00:07:54,080 --> 00:07:57,520 Speaker 3: that the technology hasn't translated to lower prices for consumers. 144 00:07:57,600 --> 00:07:59,600 Speaker 3: And I don't have a good answer for why now. 145 00:08:00,080 --> 00:08:04,160 Speaker 3: Accept that we've had this long standing affordability crisis in 146 00:08:04,200 --> 00:08:06,160 Speaker 3: the US that sort of came to a head with COVID. 147 00:08:06,240 --> 00:08:11,120 Speaker 3: So COVID because it increased residential demand so fast, we 148 00:08:11,160 --> 00:08:14,440 Speaker 3: saw this big increase in home prices and supply hasn't 149 00:08:14,440 --> 00:08:17,160 Speaker 3: had a chance to catch up, and so I think 150 00:08:17,280 --> 00:08:20,200 Speaker 3: that might be why there's a little bit more openness 151 00:08:20,280 --> 00:08:22,600 Speaker 3: to sort of thinking about this. But you brought up 152 00:08:22,640 --> 00:08:26,520 Speaker 3: rental agents. But the other lawsuit we're seeing is one 153 00:08:26,680 --> 00:08:31,320 Speaker 3: about real Page and the software for rental housing, where 154 00:08:31,360 --> 00:08:34,680 Speaker 3: again it's like our the landlord's colluding here by using 155 00:08:34,760 --> 00:08:37,680 Speaker 3: the same software and providing data to basically extract the 156 00:08:37,720 --> 00:08:41,239 Speaker 3: most they can from renters. So that's my best guess. 157 00:08:41,440 --> 00:08:44,280 Speaker 3: I think the FCC does have a lawsuit against realtors 158 00:08:44,280 --> 00:08:46,600 Speaker 3: as well, but that's my guess. It has been a 159 00:08:46,600 --> 00:08:49,600 Speaker 3: long time coming. It's you know, I have to say 160 00:08:50,160 --> 00:08:52,560 Speaker 3: I was very happy to see the bird at Sisser 161 00:08:52,640 --> 00:08:55,120 Speaker 3: case because I think it's a bit outrageous to force 162 00:08:55,200 --> 00:08:57,839 Speaker 3: consumers to pay this price. And I want to get 163 00:08:57,840 --> 00:09:00,800 Speaker 3: into another sort of maybe more hit in cost of 164 00:09:00,800 --> 00:09:03,520 Speaker 3: being forced to hire a realtor, which is what sort 165 00:09:03,559 --> 00:09:07,360 Speaker 3: of incentives they have in terms of your portfolio by 166 00:09:07,360 --> 00:09:09,880 Speaker 3: being forced to work with a full service broker. 167 00:09:10,360 --> 00:09:14,640 Speaker 2: Right, So I assume that given the way these commissions 168 00:09:14,800 --> 00:09:18,360 Speaker 2: are set, where like the selling agent will split the 169 00:09:18,360 --> 00:09:21,400 Speaker 2: commission with the buying agent. I assume that means that 170 00:09:21,559 --> 00:09:26,640 Speaker 2: buying agents are incentivized to push the listings that have 171 00:09:26,920 --> 00:09:29,440 Speaker 2: a higher fee. Right, if someone is offering them like 172 00:09:29,520 --> 00:09:32,840 Speaker 2: one percent instead of two point five percent, they're probably 173 00:09:32,880 --> 00:09:34,800 Speaker 2: not that interested. They're probably not going to be pushing 174 00:09:34,840 --> 00:09:36,480 Speaker 2: that property as much to buyers. 175 00:09:36,760 --> 00:09:39,959 Speaker 3: For sure. There's very few in practice of commissions that 176 00:09:40,000 --> 00:09:42,240 Speaker 3: are really, you know, in the two percent range for 177 00:09:42,520 --> 00:09:45,439 Speaker 3: combining the buyer and the seller. I think the more 178 00:09:45,960 --> 00:09:49,400 Speaker 3: concerning part to me is that a full service agent 179 00:09:49,880 --> 00:09:52,280 Speaker 3: has an incentive, first of all to always get you 180 00:09:52,360 --> 00:09:54,640 Speaker 3: to buy. That's kind of obvious because they get paid 181 00:09:54,720 --> 00:09:57,040 Speaker 3: as a percentage of the house. But they also have 182 00:09:57,120 --> 00:10:00,199 Speaker 3: an incentive to put you into the most expensive home 183 00:10:00,600 --> 00:10:03,400 Speaker 3: you can qualify for a mortgage for. And this is 184 00:10:03,440 --> 00:10:06,880 Speaker 3: actually the bigger concern to me, because having all of 185 00:10:06,920 --> 00:10:10,959 Speaker 3: your assets in one asset that actually has a lot 186 00:10:11,000 --> 00:10:14,680 Speaker 3: of kind of not diversified risk is actually not great 187 00:10:14,760 --> 00:10:18,760 Speaker 3: from a financial portfolio perspective. Right, So for the average household, 188 00:10:19,000 --> 00:10:21,120 Speaker 3: the vast majority of their wealth is in their house, 189 00:10:21,160 --> 00:10:24,080 Speaker 3: and you might not want to be in a house 190 00:10:24,200 --> 00:10:26,600 Speaker 3: that is taking up forty percent of your income to 191 00:10:26,600 --> 00:10:29,959 Speaker 3: pay the mortgage. And you know, maybe a smaller house 192 00:10:30,040 --> 00:10:33,160 Speaker 3: might be a better fit for your portfolio because then 193 00:10:33,200 --> 00:10:34,880 Speaker 3: you had a little bit more money to put into 194 00:10:34,880 --> 00:10:38,240 Speaker 3: stocks and bonds and maybe some private equity. So that's 195 00:10:38,280 --> 00:10:41,360 Speaker 3: actually my bigger concern with the current structure is that 196 00:10:41,480 --> 00:10:43,839 Speaker 3: it's very hard to get a flat rate service right 197 00:10:43,880 --> 00:10:46,160 Speaker 3: now with a buying agent. I want to make clear, 198 00:10:46,520 --> 00:10:50,160 Speaker 3: I think a lot of buyers may benefit from the 199 00:10:50,200 --> 00:10:54,080 Speaker 3: expertise of somebody to help them buy a house or 200 00:10:54,120 --> 00:10:58,000 Speaker 3: to help them sell a house. The structure, though, isn't 201 00:10:58,000 --> 00:11:00,560 Speaker 3: giving me the option as a consumer right now to 202 00:11:00,600 --> 00:11:03,160 Speaker 3: say I want to pay somebody a flat rate to 203 00:11:03,200 --> 00:11:06,199 Speaker 3: show me around, or I want to pay somebody, you know, 204 00:11:06,559 --> 00:11:09,400 Speaker 3: ten thousand dollars to show me around and do all 205 00:11:09,440 --> 00:11:13,200 Speaker 3: the paperwork and also look at how it fits in 206 00:11:13,240 --> 00:11:16,840 Speaker 3: with my overall portfolio. You know, that structure doesn't exist 207 00:11:16,960 --> 00:11:19,719 Speaker 3: right now. That's what concerns me most because of the 208 00:11:19,960 --> 00:11:24,080 Speaker 3: listing agent having it put in the contract. So how 209 00:11:24,080 --> 00:11:27,040 Speaker 3: the buyer agent is going to get compensated is determined 210 00:11:27,080 --> 00:11:29,520 Speaker 3: again before you even walk through the door. 211 00:11:29,840 --> 00:11:32,640 Speaker 1: So wait, let's just say Tracy and I wanted to 212 00:11:32,679 --> 00:11:36,640 Speaker 1: become buyers agents, buyer's brokers, and we said, you know what, 213 00:11:36,679 --> 00:11:39,440 Speaker 1: we're just going to charge by the hour, and it 214 00:11:39,480 --> 00:11:41,280 Speaker 1: doesn't matter whether you buy a two million dollar house, 215 00:11:41,280 --> 00:11:43,080 Speaker 1: it doesn't matter whether you buy a half a million 216 00:11:43,080 --> 00:11:45,760 Speaker 1: dollar house. This is our hourly fee. We'll take you around, 217 00:11:45,760 --> 00:11:49,280 Speaker 1: et cetera. Is that possible under the current structure? Could 218 00:11:49,320 --> 00:11:51,920 Speaker 1: we even enter the market with such an offering? 219 00:11:52,160 --> 00:11:57,600 Speaker 3: It's technically possible, But then it's almost impossible to do though, 220 00:11:57,679 --> 00:12:00,439 Speaker 3: because the way buyers are going to perceive it. In addition, 221 00:12:01,320 --> 00:12:03,319 Speaker 3: they're going to get compensated this, you know, two and 222 00:12:03,360 --> 00:12:05,720 Speaker 3: a half or three percent of the home value, and 223 00:12:05,840 --> 00:12:08,480 Speaker 3: so very few buyers are going to be willing to 224 00:12:08,520 --> 00:12:11,520 Speaker 3: pay that given right now, they're looking at a market 225 00:12:11,520 --> 00:12:13,760 Speaker 3: where they don't have to come out of pocket. And again, 226 00:12:13,840 --> 00:12:16,840 Speaker 3: that additional two and a half three percent is already 227 00:12:16,840 --> 00:12:19,640 Speaker 3: baked into the value of the house, and so I 228 00:12:19,679 --> 00:12:22,600 Speaker 3: think it'd be very hard to convince a buyer. We 229 00:12:22,600 --> 00:12:24,080 Speaker 3: couldn't say, like value, what if? 230 00:12:24,760 --> 00:12:26,640 Speaker 1: What if? What if we said we're going to remit 231 00:12:26,679 --> 00:12:28,560 Speaker 1: that three percent to you get cash back. 232 00:12:28,720 --> 00:12:31,880 Speaker 3: It's a good question because there is a company called 233 00:12:32,000 --> 00:12:35,000 Speaker 3: Homie here in Utah that's been trying to do that 234 00:12:35,720 --> 00:12:38,720 Speaker 3: and the Utah Association of Builders have made it very 235 00:12:38,760 --> 00:12:41,600 Speaker 3: hard for them to actually run a competitive business model 236 00:12:41,640 --> 00:12:44,320 Speaker 3: with that. There are some companies around the country that 237 00:12:44,360 --> 00:12:47,400 Speaker 3: have tried that to try to remit I think REDFID 238 00:12:47,440 --> 00:12:49,560 Speaker 3: might have that model where they're trying to remit some 239 00:12:49,720 --> 00:12:53,559 Speaker 3: of that brokerage commission to the buyer exactly to try 240 00:12:53,600 --> 00:12:55,640 Speaker 3: to so some buyers who are like I don't really 241 00:12:55,720 --> 00:12:58,520 Speaker 3: want to pay the full three percent, And it sort 242 00:12:58,520 --> 00:13:01,520 Speaker 3: of depends on how power hold of realtor's lobby is 243 00:13:01,920 --> 00:13:04,760 Speaker 3: in various states, the success these companies have had with this. 244 00:13:20,480 --> 00:13:26,040 Speaker 2: So you mentioned expertise of realtors earlier, and my understanding 245 00:13:26,080 --> 00:13:30,240 Speaker 2: that this is without being mean to the thousands of 246 00:13:30,280 --> 00:13:33,240 Speaker 2: realtors across the country, this is a point of contention, 247 00:13:33,480 --> 00:13:36,400 Speaker 2: and one of the arguments is that, well, the fee 248 00:13:36,520 --> 00:13:41,199 Speaker 2: the commission basically remains the same across all different types 249 00:13:41,240 --> 00:13:44,880 Speaker 2: of realtors of varying skills, who you know, might put 250 00:13:44,960 --> 00:13:49,360 Speaker 2: more or less time into either buying or selling your home. 251 00:13:49,920 --> 00:13:53,960 Speaker 2: So I guess the question is how valid is that criticism, 252 00:13:54,160 --> 00:13:57,880 Speaker 2: How difficult is it to buy or sell someone a house, 253 00:13:58,080 --> 00:13:59,360 Speaker 2: particularly in this market. 254 00:13:59,640 --> 00:14:03,280 Speaker 3: I think the answer is that there's huge variation in 255 00:14:03,320 --> 00:14:07,640 Speaker 3: the quality of realtors and what services do you want 256 00:14:07,640 --> 00:14:10,360 Speaker 3: as a home buyer. You can't unbundle them right now. 257 00:14:10,880 --> 00:14:13,520 Speaker 3: I know in my own case, I basically have the 258 00:14:13,559 --> 00:14:16,000 Speaker 3: house picked out by the time I go to it, 259 00:14:16,200 --> 00:14:19,440 Speaker 3: like with the realtor, and I basically having to pay 260 00:14:19,480 --> 00:14:21,640 Speaker 3: somebody a huge amount of money to fill it some 261 00:14:21,640 --> 00:14:23,560 Speaker 3: paperwork I could have hired. I could have either done 262 00:14:23,560 --> 00:14:26,520 Speaker 3: the paperwork myself or hired a real estate attorney for 263 00:14:27,280 --> 00:14:29,960 Speaker 3: you know, a couple thousand dollars. You know, typically they're 264 00:14:29,960 --> 00:14:32,040 Speaker 3: going to put a second year associate or something that 265 00:14:32,160 --> 00:14:35,600 Speaker 3: it's not complicated paperwork for most you know, residential real 266 00:14:35,680 --> 00:14:38,320 Speaker 3: estate transactions. And I do think it's very costly to 267 00:14:38,360 --> 00:14:41,880 Speaker 3: get a bad realtor because again, these are ones that 268 00:14:41,960 --> 00:14:46,400 Speaker 3: are especially unlikely to understand the risks of the home. 269 00:14:46,920 --> 00:14:49,320 Speaker 3: The home ownership is really really risky, and I think 270 00:14:49,320 --> 00:14:53,240 Speaker 3: people underestimate that, maybe especially with recency bias. You know, 271 00:14:53,280 --> 00:14:55,280 Speaker 3: you if you bought a home in the last five years, 272 00:14:55,280 --> 00:14:58,760 Speaker 3: you've done phenomenally well, and people somehow have forgotten what 273 00:14:58,840 --> 00:15:00,600 Speaker 3: happened if you bought a home in two and five 274 00:15:00,680 --> 00:15:03,720 Speaker 3: in Florida. So home prices do go down, and individual 275 00:15:03,800 --> 00:15:07,480 Speaker 3: homes often have you know, every home has defects. But 276 00:15:07,480 --> 00:15:09,520 Speaker 3: what does it take to be a realtor? In most 277 00:15:09,520 --> 00:15:12,320 Speaker 3: states you have to have a college degree in some field, 278 00:15:12,720 --> 00:15:15,760 Speaker 3: some sort of college degree, and either you know, somewhere 279 00:15:15,760 --> 00:15:19,520 Speaker 3: between fifty seventy maybe even one hundred hours of online training. 280 00:15:19,560 --> 00:15:23,120 Speaker 3: But half the online trading tends to be like propaganda 281 00:15:23,200 --> 00:15:27,360 Speaker 3: for the National Association of Realtors on why it's terrible 282 00:15:27,400 --> 00:15:31,120 Speaker 3: to work without a realtor. You know. So, I do 283 00:15:31,160 --> 00:15:33,840 Speaker 3: think there are nuances of buying a home and it 284 00:15:34,240 --> 00:15:37,320 Speaker 3: seems scary, I think, especially for first time home buyers. 285 00:15:37,400 --> 00:15:39,040 Speaker 3: Right there's this huge sense of like what if it 286 00:15:39,080 --> 00:15:41,920 Speaker 3: goes down? And what if I miss like a leak 287 00:15:41,920 --> 00:15:43,960 Speaker 3: in the ceiling and there's you know, I think when 288 00:15:44,000 --> 00:15:46,280 Speaker 3: you've done it a few times, you're like, oh, yeah, 289 00:15:46,320 --> 00:15:47,720 Speaker 3: old houses have leaks. 290 00:15:47,480 --> 00:15:50,000 Speaker 2: Old houses like you tell me about it. 291 00:15:50,480 --> 00:15:52,720 Speaker 3: That is just part of the deal. That there's a 292 00:15:52,720 --> 00:15:54,880 Speaker 3: lot of maidens costs that you won't foresee. But it 293 00:15:54,960 --> 00:15:57,760 Speaker 3: is scary, and I do think there are some downside 294 00:15:57,840 --> 00:16:02,080 Speaker 3: risks that working with a realtor. You know, a good 295 00:16:02,120 --> 00:16:06,120 Speaker 3: realtor can help with, and good realtors also you know, 296 00:16:06,160 --> 00:16:09,000 Speaker 3: they view their customers more as sort of a long 297 00:16:09,080 --> 00:16:11,440 Speaker 3: term relationship, and they know they're going to get business 298 00:16:11,440 --> 00:16:12,840 Speaker 3: from word of mouth, and they'll help you with a 299 00:16:12,880 --> 00:16:15,920 Speaker 3: lot of little things. But what I would say, Tracy 300 00:16:16,160 --> 00:16:18,560 Speaker 3: is it's not hard to get your realtor's license. That 301 00:16:18,720 --> 00:16:21,520 Speaker 3: is a true statement. How hard it is? Does Ella 302 00:16:21,600 --> 00:16:24,480 Speaker 3: house that or by a has that? That is a 303 00:16:24,520 --> 00:16:27,840 Speaker 3: sort of It varies by agent, and it varies by 304 00:16:27,880 --> 00:16:29,080 Speaker 3: individual consumer as well. 305 00:16:29,280 --> 00:16:31,560 Speaker 1: So I want to talk more about why it is 306 00:16:31,600 --> 00:16:34,680 Speaker 1: that the rise of sites like Zillow, redfin etc. Haven't 307 00:16:34,800 --> 00:16:38,280 Speaker 1: actually had the effect of cutting out the brokers who 308 00:16:38,360 --> 00:16:40,120 Speaker 1: make a lot of money. But before we do, can 309 00:16:40,160 --> 00:16:43,400 Speaker 1: we just talk about for a minute the specifics of 310 00:16:43,440 --> 00:16:48,480 Speaker 1: the Sitzer Burnett claim. What was actually alleged here in 311 00:16:48,560 --> 00:16:52,880 Speaker 1: terms of what the plaintiffs deemed to be anti competitive 312 00:16:52,920 --> 00:16:55,600 Speaker 1: or unfair about how the market is structured. And I 313 00:16:55,680 --> 00:16:58,960 Speaker 1: think also a couple of the brokerages had already settled 314 00:16:59,000 --> 00:17:01,200 Speaker 1: out of court and word of affected. But just walk 315 00:17:01,280 --> 00:17:04,760 Speaker 1: those through. Well, really this was about yeah. 316 00:17:04,560 --> 00:17:08,800 Speaker 3: So this is a group of individual home sellers, Okay, okay, 317 00:17:09,000 --> 00:17:10,280 Speaker 3: and what they are alleging. 318 00:17:10,359 --> 00:17:13,120 Speaker 2: Can I just tack on I don't understand why damages 319 00:17:13,160 --> 00:17:16,000 Speaker 2: were awarded just to the sellers and not to the 320 00:17:16,040 --> 00:17:18,560 Speaker 2: buyers as well. Who would be I mean, they're paying 321 00:17:18,600 --> 00:17:21,240 Speaker 2: the sellers by paying for the house, and the cost 322 00:17:21,280 --> 00:17:22,920 Speaker 2: is incorporated in the purchase price. 323 00:17:23,920 --> 00:17:25,840 Speaker 3: Yeah, so it's a good question. The buyers were not 324 00:17:25,880 --> 00:17:28,119 Speaker 3: part of the suit, right, So this is a class 325 00:17:28,160 --> 00:17:30,440 Speaker 3: action suit and the buyers are not part of the 326 00:17:30,480 --> 00:17:32,480 Speaker 3: party to suit, so I think they don't have standing, 327 00:17:32,560 --> 00:17:36,159 Speaker 3: if Tracy, that would be my understanding. And technically, in 328 00:17:36,240 --> 00:17:38,720 Speaker 3: terms of the actual bikiniary cost, it is sellers that 329 00:17:38,760 --> 00:17:41,919 Speaker 3: are paying it. You're right, who actually paid for the 330 00:17:42,119 --> 00:17:44,879 Speaker 3: higher house price to compensate the sellers? It's the buyers, right, 331 00:17:44,920 --> 00:17:46,160 Speaker 3: They're not party to the suit. 332 00:17:46,200 --> 00:17:48,640 Speaker 2: As far as I understand, I feel more class action 333 00:17:48,840 --> 00:17:50,919 Speaker 2: lawsuits might be coming. I'm bad to. 334 00:17:51,000 --> 00:17:54,480 Speaker 3: Buyers, yeah, I mean, I'm actually really happy these It's 335 00:17:54,600 --> 00:17:57,520 Speaker 3: hard to imagine spending this much time on a case, 336 00:17:57,720 --> 00:18:01,000 Speaker 3: right when it's twenty thirty thousand or something. It's not 337 00:18:01,080 --> 00:18:03,240 Speaker 3: a huge amount of money, and it's a lot of 338 00:18:03,280 --> 00:18:06,080 Speaker 3: time in the seller's lives. But what they're saying is 339 00:18:06,080 --> 00:18:08,720 Speaker 3: they're claiming it's a restraint of trade. It's a collusion 340 00:18:09,040 --> 00:18:14,760 Speaker 3: to set the price specifically for the buyer's commission, so 341 00:18:14,800 --> 00:18:17,040 Speaker 3: the senses you can negotiate over the overall, you know, 342 00:18:17,119 --> 00:18:19,560 Speaker 3: five or six percent, there's not a ton of negotiating 343 00:18:19,600 --> 00:18:23,160 Speaker 3: room because oftentimes, because again this propaganda and the realtor's course, 344 00:18:23,200 --> 00:18:24,720 Speaker 3: they'll say, no, I'm not going to even take it 345 00:18:24,760 --> 00:18:28,040 Speaker 3: if it's a three percent commission overall, Like that's how 346 00:18:28,080 --> 00:18:31,640 Speaker 3: they're sort of taught. But it's specifically. We haven't heard 347 00:18:31,640 --> 00:18:35,360 Speaker 3: what the remedies are, and I'm excited to see what 348 00:18:35,400 --> 00:18:38,520 Speaker 3: the court comes up with with the remedies, but my 349 00:18:38,720 --> 00:18:41,160 Speaker 3: guess is they're no longer going to be able to 350 00:18:41,280 --> 00:18:44,520 Speaker 3: mandate in the listing agreements. So basically the deal what 351 00:18:44,560 --> 00:18:47,600 Speaker 3: these home sellers were faced with was if I want 352 00:18:47,640 --> 00:18:49,560 Speaker 3: to work with a realtor, and the only way you 353 00:18:49,600 --> 00:18:51,919 Speaker 3: get your house on the multiple listing service is you 354 00:18:51,960 --> 00:18:54,240 Speaker 3: work with a realtor. That's sort of a requirement to 355 00:18:54,320 --> 00:18:56,840 Speaker 3: get your house. So if you can't get your house 356 00:18:56,840 --> 00:18:58,200 Speaker 3: on the multiple, so this is your key. 357 00:18:58,480 --> 00:19:01,480 Speaker 1: You just as explain this the role of the multiple 358 00:19:01,520 --> 00:19:03,920 Speaker 1: listing services within the market infrastructure. 359 00:19:04,440 --> 00:19:08,520 Speaker 3: It's almost impossible to sell a house without I don't 360 00:19:08,520 --> 00:19:10,960 Speaker 3: want to say impossible, but you'd be taking a huge 361 00:19:10,960 --> 00:19:14,480 Speaker 3: discount because buyers won't even see your house even when 362 00:19:14,520 --> 00:19:17,400 Speaker 3: you go to Zillow or redfin or some of these. 363 00:19:17,400 --> 00:19:20,400 Speaker 3: So Zilo does have a for sale by buyer option, 364 00:19:21,240 --> 00:19:23,520 Speaker 3: but it's actually shown differently if you look at the 365 00:19:23,560 --> 00:19:27,639 Speaker 3: fine print, it's actually shown differently than any contract that 366 00:19:27,720 --> 00:19:30,399 Speaker 3: is on the multiple listings. So this is basically information 367 00:19:30,480 --> 00:19:34,040 Speaker 3: that realtors share with one another. In disclosure states, which 368 00:19:34,040 --> 00:19:36,359 Speaker 3: is the majority of US states, you can see the 369 00:19:36,359 --> 00:19:39,159 Speaker 3: transaction prices and you can see the listing prices, and 370 00:19:39,200 --> 00:19:42,480 Speaker 3: that is a matter of public record. It's actually harder 371 00:19:42,560 --> 00:19:45,840 Speaker 3: in states like the one I'm in in Utah or Texas, 372 00:19:45,920 --> 00:19:48,159 Speaker 3: some of these other what we call it non disclosure states. 373 00:19:48,800 --> 00:19:52,960 Speaker 3: In non disclosure states, sales prices of real estate are 374 00:19:53,000 --> 00:19:56,199 Speaker 3: not a matter of public record. What that means is 375 00:19:56,200 --> 00:19:59,639 Speaker 3: that the only people that have access to that information 376 00:20:00,240 --> 00:20:03,159 Speaker 3: are realtors through the multiple listing service. So it's not 377 00:20:03,200 --> 00:20:05,240 Speaker 3: a matter of public record. What's on the MLS is 378 00:20:05,320 --> 00:20:09,520 Speaker 3: not public record. And so part of the reason that 379 00:20:09,640 --> 00:20:14,040 Speaker 3: realtors in states like Utah and Texas have resisted going 380 00:20:14,080 --> 00:20:17,560 Speaker 3: to a disclosure regime is that it takes away their 381 00:20:17,600 --> 00:20:20,640 Speaker 3: informational advantage, if that makes sense. So right now, even 382 00:20:20,640 --> 00:20:24,480 Speaker 3: if I could hire a realtor piecemeal to either sell 383 00:20:24,560 --> 00:20:26,000 Speaker 3: or buy a house so I didn't have to pay 384 00:20:26,000 --> 00:20:29,440 Speaker 3: it through this commission structure, it still make it pretty 385 00:20:29,480 --> 00:20:33,240 Speaker 3: difficult for me, as an individual buyer seller to figure 386 00:20:33,240 --> 00:20:36,399 Speaker 3: out the fair market value of my house either that 387 00:20:36,400 --> 00:20:39,719 Speaker 3: I'm buying or selling, because I don't have the information, 388 00:20:40,240 --> 00:20:42,960 Speaker 3: but the realtors do through the MLS. 389 00:20:43,440 --> 00:20:47,200 Speaker 2: Got it. So there's obviously been a lot of reaction 390 00:20:47,680 --> 00:20:51,480 Speaker 2: to this decision on the case, and I've seen so 391 00:20:51,640 --> 00:20:55,960 Speaker 2: many commentary pieces about what this means for realtors for 392 00:20:56,080 --> 00:20:59,440 Speaker 2: the housing market in general. And I suppose you could 393 00:20:59,440 --> 00:21:03,720 Speaker 2: summit all up by nothing good for realtors, but a 394 00:21:03,760 --> 00:21:06,640 Speaker 2: lot of it seems to be going in various directions. 395 00:21:06,640 --> 00:21:09,439 Speaker 2: So why don't I just ask you the top line question? 396 00:21:09,600 --> 00:21:13,840 Speaker 2: But what does this mean for the real estate broker industry? 397 00:21:14,359 --> 00:21:17,479 Speaker 3: So it's a good question. My hope would be is 398 00:21:17,520 --> 00:21:19,960 Speaker 3: that it forces out some of these very part time 399 00:21:20,000 --> 00:21:22,800 Speaker 3: realtors that do a couple transactions a year that I 400 00:21:22,840 --> 00:21:28,240 Speaker 3: think are really not helping home buyers or sellers, because 401 00:21:28,280 --> 00:21:30,320 Speaker 3: I think those folks are just sort of waiting for 402 00:21:30,440 --> 00:21:32,480 Speaker 3: good luck, a windfall. That's how they can stay in 403 00:21:32,480 --> 00:21:34,399 Speaker 3: the industry even though they're not they don't have a 404 00:21:34,400 --> 00:21:37,920 Speaker 3: ton of expertise. I do think you'll see commissions come down, 405 00:21:37,960 --> 00:21:41,720 Speaker 3: and I hope you'll see more piecemeal services. The other 406 00:21:41,920 --> 00:21:45,480 Speaker 3: thing I suspect we really need to know what the 407 00:21:45,560 --> 00:21:49,439 Speaker 3: court decrees as remedies, because that's what we haven't seen yet. 408 00:21:49,600 --> 00:21:53,280 Speaker 3: The hope is that the remedies will be you cannot 409 00:21:53,440 --> 00:21:56,639 Speaker 3: it cannot be the seller that's compensating the buyer's agent, 410 00:21:56,720 --> 00:21:59,280 Speaker 3: at least not as a commission. People do have worries 411 00:21:59,359 --> 00:22:01,960 Speaker 3: about that, butarticularly for first time home buyers who are 412 00:22:02,280 --> 00:22:05,440 Speaker 3: credit constrained, right, they have limited cash, and asking them 413 00:22:05,440 --> 00:22:07,720 Speaker 3: to come up with another ten or fifteen or even 414 00:22:07,760 --> 00:22:11,240 Speaker 3: twenty thousand dollars to compensate a broker, that's hard. But 415 00:22:11,359 --> 00:22:13,760 Speaker 3: that I suspect is going to be the remedy because 416 00:22:13,760 --> 00:22:17,520 Speaker 3: the particularly anti competitive part of the case that the 417 00:22:17,560 --> 00:22:21,840 Speaker 3: allegations are that you're setting the price in advance with 418 00:22:21,920 --> 00:22:24,440 Speaker 3: no opportunity for the buyer and negotiate. Right. 419 00:22:24,680 --> 00:22:26,919 Speaker 2: So, just on this note, I mean, could the National 420 00:22:26,960 --> 00:22:31,320 Speaker 2: Association of Realtors agree to some sort of settlement where 421 00:22:31,320 --> 00:22:33,840 Speaker 2: they do decide to make some changes. 422 00:22:34,560 --> 00:22:36,280 Speaker 3: Yeah, they've said they're going to fight it, right, so 423 00:22:36,320 --> 00:22:39,480 Speaker 3: they're going to appeal. They're appealing. I'm interested to see 424 00:22:39,480 --> 00:22:41,800 Speaker 3: what's in that appeal. They could settle, but I suspect 425 00:22:41,840 --> 00:22:45,360 Speaker 3: what they're going to claim is that these laws are 426 00:22:45,480 --> 00:22:48,000 Speaker 3: largely set at the state level, and they're going to 427 00:22:48,000 --> 00:22:49,800 Speaker 3: say it has nothing to do with the National Association 428 00:22:49,880 --> 00:22:52,240 Speaker 3: of Furnitures. I don't know this for a fact. I'm 429 00:22:52,240 --> 00:22:55,320 Speaker 3: speculating the CORE has been asked to come up with 430 00:22:55,400 --> 00:22:58,720 Speaker 3: remedies specifically, and so the settlement doesn't really deal with 431 00:22:58,760 --> 00:23:03,680 Speaker 3: the remedies unless NAR would agree to its various member organizations, 432 00:23:03,720 --> 00:23:06,399 Speaker 3: these state level realtor's boards. You know, that might be 433 00:23:06,440 --> 00:23:08,959 Speaker 3: an option, but we have to see remedies. We have 434 00:23:09,040 --> 00:23:10,720 Speaker 3: to see we are no longer going to engage in 435 00:23:10,760 --> 00:23:15,320 Speaker 3: this practice that has been identified as restraint of trade. 436 00:23:15,520 --> 00:23:17,640 Speaker 2: And then the other thing I was wondering, just from 437 00:23:17,680 --> 00:23:21,320 Speaker 2: a legal strategy perspective, but you know, there are multiple 438 00:23:21,480 --> 00:23:26,359 Speaker 2: brokers involved in multiple lawsuits at this point. Could you 439 00:23:26,440 --> 00:23:29,800 Speaker 2: start to see some sort of like fracturing of the 440 00:23:29,840 --> 00:23:34,639 Speaker 2: industry where individual companies try to argue that they're not 441 00:23:34,920 --> 00:23:39,840 Speaker 2: like the other brokerages that are price fixing that you know, 442 00:23:39,920 --> 00:23:42,840 Speaker 2: maybe they deserve a carve out from some of these 443 00:23:42,920 --> 00:23:45,320 Speaker 2: lawsuits or something like that. Could you kind of see 444 00:23:45,640 --> 00:23:47,680 Speaker 2: intra industry fighting. 445 00:23:48,040 --> 00:23:52,120 Speaker 3: I doubt it, with the exception of some of these 446 00:23:52,160 --> 00:23:55,400 Speaker 3: flat raid or you know, low commission services, and those 447 00:23:55,440 --> 00:23:57,480 Speaker 3: do exist, and you have seen more of those pop 448 00:23:57,560 --> 00:24:00,199 Speaker 3: up in the last ten years or so. Again, some 449 00:24:00,280 --> 00:24:05,159 Speaker 3: states make it feasible in some states try to extinguish 450 00:24:05,160 --> 00:24:09,119 Speaker 3: this business model. I think anybody who's operating on this 451 00:24:09,359 --> 00:24:15,120 Speaker 3: structure where the buyer's agents compensated explicitly in the listic agreement, 452 00:24:15,280 --> 00:24:17,800 Speaker 3: I can't see that surviving. And so I think if 453 00:24:17,800 --> 00:24:20,000 Speaker 3: that's your business model, which is the business model of 454 00:24:20,040 --> 00:24:24,440 Speaker 3: the vast majority of these large brokerages, I cannot see 455 00:24:24,440 --> 00:24:27,600 Speaker 3: how they could claim they're doing something fundamentally different. 456 00:24:42,760 --> 00:24:45,840 Speaker 1: One reason why there's a lot of anxiety and concern 457 00:24:45,920 --> 00:24:47,879 Speaker 1: and interest in the space right now is because the 458 00:24:47,920 --> 00:24:51,040 Speaker 1: housing affordability problem. We've been talking about it on the 459 00:24:51,040 --> 00:24:55,240 Speaker 1: show a lot. By some measures, the least affordable housing market. Ever, 460 00:24:55,840 --> 00:24:58,199 Speaker 1: I don't know, just to put on your sort of 461 00:24:58,440 --> 00:25:01,720 Speaker 1: academic professor of fine nance hat for a second. You know, 462 00:25:01,760 --> 00:25:04,360 Speaker 1: if you take out the broker, do houses actually get 463 00:25:04,400 --> 00:25:08,400 Speaker 1: cheaper or does it just mean that the seller pockets 464 00:25:08,440 --> 00:25:10,520 Speaker 1: more of the money. If I see a house that's 465 00:25:10,560 --> 00:25:14,520 Speaker 1: listed for a million dollars and we take out six percent, 466 00:25:14,560 --> 00:25:17,520 Speaker 1: I guess that's take out sixty thousand. Does that mean 467 00:25:17,600 --> 00:25:19,760 Speaker 1: that if that goes away, maybe it goes down to 468 00:25:19,800 --> 00:25:22,240 Speaker 1: twenty thousand. Does that mean that the house gets forty 469 00:25:22,280 --> 00:25:24,159 Speaker 1: thousand dollars cheaper or does it just mean that the 470 00:25:24,200 --> 00:25:26,520 Speaker 1: seller walks away with forty thousand dollars more. 471 00:25:27,200 --> 00:25:29,120 Speaker 3: I think it's a little bit of both. It's forty 472 00:25:29,160 --> 00:25:33,479 Speaker 3: thousand dollars that was previously going to the agents, and 473 00:25:33,560 --> 00:25:38,240 Speaker 3: hopefully that will be shared between the buyer in the 474 00:25:38,280 --> 00:25:41,960 Speaker 3: form of a lower home price and the seller. And 475 00:25:42,400 --> 00:25:45,159 Speaker 3: you know what weights is it fifty to fifty? It 476 00:25:45,240 --> 00:25:47,720 Speaker 3: kind of depends a little bit on the market right now, 477 00:25:48,000 --> 00:25:49,919 Speaker 3: you know, it's it's not a great time to be 478 00:25:49,920 --> 00:25:52,879 Speaker 3: a seller. So I suspect that the potential buyers that 479 00:25:52,920 --> 00:25:56,720 Speaker 3: are willing to buy existing homes rather than new construction, 480 00:25:57,359 --> 00:25:59,480 Speaker 3: I suspect that the buyer's wait a little bit more, 481 00:25:59,520 --> 00:26:01,800 Speaker 3: so you will a little more softening at home prices. 482 00:26:02,200 --> 00:26:04,720 Speaker 3: So it's a little bit of both. Right, it's surplus 483 00:26:04,760 --> 00:26:07,959 Speaker 3: that is now available to be shared between the buyer 484 00:26:08,400 --> 00:26:08,960 Speaker 3: and the seller. 485 00:26:09,920 --> 00:26:13,919 Speaker 2: How does the US commission system and the rates, the 486 00:26:13,920 --> 00:26:16,360 Speaker 2: average rates that we're paying five or six percent, how 487 00:26:16,400 --> 00:26:19,200 Speaker 2: do those stack up against other countries? Because I feel 488 00:26:19,240 --> 00:26:22,119 Speaker 2: like those sort of interracuntry comparisons are really useful in 489 00:26:22,160 --> 00:26:26,399 Speaker 2: helping us understand how unusual or different the American system 490 00:26:26,480 --> 00:26:26,840 Speaker 2: might be. 491 00:26:27,520 --> 00:26:31,040 Speaker 3: Absolutely, the US system is very unique. You don't see 492 00:26:31,040 --> 00:26:32,119 Speaker 3: this overseas. 493 00:26:32,400 --> 00:26:34,600 Speaker 2: American exceptionalism strikes again. 494 00:26:35,960 --> 00:26:39,960 Speaker 3: Yeah, you don't see this in Australia. You don't see 495 00:26:39,960 --> 00:26:41,880 Speaker 3: this in the UK, and the UK is like one 496 00:26:42,000 --> 00:26:44,960 Speaker 3: one and a half at most two percent, And so 497 00:26:45,040 --> 00:26:47,119 Speaker 3: you do have to ask what is it about the 498 00:26:47,280 --> 00:26:49,880 Speaker 3: US that is different? Because we largely have the same 499 00:26:49,920 --> 00:26:53,240 Speaker 3: legal structure, right, these are both sort of common law countries. 500 00:26:53,680 --> 00:26:58,000 Speaker 3: Property markets aren't that different, especially looking at Australia, and 501 00:26:58,040 --> 00:26:59,640 Speaker 3: so I do think you have to sort of say, 502 00:26:59,680 --> 00:27:03,480 Speaker 3: why are we special? Is there something that's especially difficult 503 00:27:03,520 --> 00:27:07,400 Speaker 3: and time consuming about buying and selling residential real estate 504 00:27:07,440 --> 00:27:09,359 Speaker 3: in US? And I think the answer is probably no. 505 00:27:10,040 --> 00:27:15,720 Speaker 1: Can you explain further the impediments that states or realtors 506 00:27:15,800 --> 00:27:20,879 Speaker 1: in those states put up to thwart alternative broker models, 507 00:27:20,920 --> 00:27:23,800 Speaker 1: because you mentioned, yes, some of these do actually exist, 508 00:27:23,800 --> 00:27:26,040 Speaker 1: and that there are companies that will remit part of 509 00:27:26,080 --> 00:27:29,080 Speaker 1: their the broker fe back to the buyer, et cetera, 510 00:27:29,160 --> 00:27:32,480 Speaker 1: but that the realtors put up roadblocks and make those 511 00:27:32,520 --> 00:27:34,920 Speaker 1: business models hard. What makes them. 512 00:27:34,840 --> 00:27:39,719 Speaker 3: Hard, I think that they sometimes almost will kind of 513 00:27:39,800 --> 00:27:42,960 Speaker 3: blacklist you or take away your license if you're operating 514 00:27:43,000 --> 00:27:46,800 Speaker 3: under certain business models. I don't know all the individual 515 00:27:47,000 --> 00:27:50,320 Speaker 3: states exactly, but I do know having bought a home 516 00:27:50,400 --> 00:27:53,720 Speaker 3: and let's see four states. Now, there's a lot of heterogeneity, 517 00:27:54,040 --> 00:27:58,120 Speaker 3: and i'd say that the non disclosure states are especially 518 00:27:58,240 --> 00:28:01,199 Speaker 3: challenging for these other business model. And part of the 519 00:28:01,320 --> 00:28:03,199 Speaker 3: value of a good realtor is that they have an 520 00:28:03,200 --> 00:28:06,720 Speaker 3: informational advantage. They're doing a lot of transactions, They're spending 521 00:28:06,760 --> 00:28:09,119 Speaker 3: a lot of time thinking about the market and learning 522 00:28:09,160 --> 00:28:11,440 Speaker 3: about what's on the market, and they may know off 523 00:28:11,480 --> 00:28:14,000 Speaker 3: market deals that haven't come to market yet and those 524 00:28:14,160 --> 00:28:16,359 Speaker 3: that's a huge value. So that's the sort of value 525 00:28:16,400 --> 00:28:19,280 Speaker 3: I think a good realtor can provide. Where I sort 526 00:28:19,320 --> 00:28:22,479 Speaker 3: of have more problems is when they're actually restricting who 527 00:28:22,520 --> 00:28:25,040 Speaker 3: has access to the information. They're not just using the 528 00:28:25,080 --> 00:28:29,000 Speaker 3: information they're gathering through having multiple deals. They're saying only 529 00:28:29,040 --> 00:28:32,040 Speaker 3: a licensed realtor kind of access to this information, and 530 00:28:32,080 --> 00:28:36,639 Speaker 3: they're putting up roadblocks, certainly to disclose this information. You know, 531 00:28:36,760 --> 00:28:39,440 Speaker 3: Zillow has sued multiple times trying to get access to 532 00:28:39,480 --> 00:28:43,320 Speaker 3: this information in non disclosure states. So I don't know exactly. 533 00:28:43,360 --> 00:28:45,760 Speaker 3: It's more through I think, threatening to lose your license 534 00:28:45,760 --> 00:28:48,840 Speaker 3: if you're not operating on a certain business model. You know. 535 00:28:48,880 --> 00:28:52,280 Speaker 2: When I think about the potential macro impacts of all 536 00:28:52,320 --> 00:28:55,960 Speaker 2: of this, obviously the effects on the residential real estate 537 00:28:56,000 --> 00:28:59,880 Speaker 2: market are a huge one given its size and position 538 00:29:00,040 --> 00:29:02,360 Speaker 2: in the US economy. But the other one I kind 539 00:29:02,400 --> 00:29:06,000 Speaker 2: of think about is just from a pure labor perspective, 540 00:29:06,080 --> 00:29:09,000 Speaker 2: because there are a lot of real estate brokers in 541 00:29:09,040 --> 00:29:12,640 Speaker 2: the US, and I think there's some disagreement about what 542 00:29:12,720 --> 00:29:16,680 Speaker 2: this might mean for those jobs. I've seen some people 543 00:29:17,600 --> 00:29:20,880 Speaker 2: arguing that, like, maybe it means if commissions are coming down, 544 00:29:20,920 --> 00:29:23,200 Speaker 2: you're not making as much money. Maybe it means more 545 00:29:23,240 --> 00:29:26,520 Speaker 2: people are doing it part time. You know, On the side, 546 00:29:26,560 --> 00:29:28,480 Speaker 2: it's a little bit of a bonus that you might 547 00:29:28,520 --> 00:29:32,200 Speaker 2: make in addition to your normal day job. But then 548 00:29:32,200 --> 00:29:34,800 Speaker 2: I've seen other people arguing that actually, this is going 549 00:29:34,880 --> 00:29:39,400 Speaker 2: to mean fewer part timers. Expertise, as you were mentioning before, 550 00:29:39,520 --> 00:29:42,640 Speaker 2: becomes more important and so you're going to see more 551 00:29:42,840 --> 00:29:46,320 Speaker 2: full time agents. So I'm curious where you land in 552 00:29:46,520 --> 00:29:47,280 Speaker 2: that discussion. 553 00:29:47,800 --> 00:29:51,000 Speaker 3: Yeah, it's a good question, and I don't know definitively, 554 00:29:51,080 --> 00:29:55,600 Speaker 3: but my I would lean towards fewer overall agents and 555 00:29:55,720 --> 00:29:59,360 Speaker 3: more full time agents because I think you're going to 556 00:29:59,400 --> 00:30:02,120 Speaker 3: want to do more volume of transactions, right, and you're 557 00:30:02,160 --> 00:30:04,400 Speaker 3: going to treat a little bit more like a commodity 558 00:30:04,960 --> 00:30:08,400 Speaker 3: because you can't be compensated, you know, these huge sums 559 00:30:08,440 --> 00:30:10,360 Speaker 3: of money. I mean, I don't think we're going to 560 00:30:10,400 --> 00:30:13,160 Speaker 3: get rid of the commission structure altogether. I do think 561 00:30:13,200 --> 00:30:15,800 Speaker 3: you'll see fewer part times because basically, those part time 562 00:30:15,840 --> 00:30:18,480 Speaker 3: agents that were selling one or two houses a year, 563 00:30:19,160 --> 00:30:21,320 Speaker 3: they were just waiting to kind of get lucky, right 564 00:30:21,840 --> 00:30:25,440 Speaker 3: that somebody would come to them. And now I suppose 565 00:30:25,480 --> 00:30:29,200 Speaker 3: the commission comes down to four percent between the seller 566 00:30:29,200 --> 00:30:31,200 Speaker 3: and the buyer. I'm just throwing out a number there 567 00:30:31,560 --> 00:30:33,400 Speaker 3: that mass starts to look worse. 568 00:30:34,480 --> 00:30:36,400 Speaker 1: You know, you mentioned I think you were a little 569 00:30:36,440 --> 00:30:40,600 Speaker 1: bit skeptical of the effect of buyers brokers or buyers 570 00:30:40,640 --> 00:30:44,920 Speaker 1: agents steering people to houses based on the percent that 571 00:30:44,960 --> 00:30:47,280 Speaker 1: you do think that there was a lot of action 572 00:30:47,400 --> 00:30:50,400 Speaker 1: towards steering people to the most expensive home that people 573 00:30:50,440 --> 00:30:53,680 Speaker 1: could afford. But why don't sellers' agents just say knocking 574 00:30:53,760 --> 00:30:56,440 Speaker 1: down to two percent or one percent? I mean, why 575 00:30:56,440 --> 00:30:58,040 Speaker 1: isn't there more competition on that? 576 00:30:58,120 --> 00:31:01,880 Speaker 3: And that is because I think it's that these agents 577 00:31:01,920 --> 00:31:05,840 Speaker 3: are instructed through their education to not accept something below 578 00:31:05,880 --> 00:31:08,680 Speaker 3: five percent of the overall listing agreement, Like that's the 579 00:31:08,720 --> 00:31:12,800 Speaker 3: sort of collusion, is that they're so pushed on for 580 00:31:12,840 --> 00:31:16,440 Speaker 3: that and it's so deeply ingrained in them. Yeah, whether 581 00:31:16,520 --> 00:31:21,200 Speaker 3: that will change going forward, I don't know, but I 582 00:31:21,200 --> 00:31:24,480 Speaker 3: think the education of realtors has to change. But that 583 00:31:24,920 --> 00:31:26,600 Speaker 3: is I don't think going to be part of the 584 00:31:26,600 --> 00:31:29,120 Speaker 3: remedies in this case. To be clear, I suspect the 585 00:31:29,120 --> 00:31:32,280 Speaker 3: remedies are going to be that you can't explicitly put 586 00:31:32,320 --> 00:31:33,600 Speaker 3: in the listing agreement. 587 00:31:33,240 --> 00:31:36,600 Speaker 1: Because technically speaking it can be won the seller's agent 588 00:31:36,680 --> 00:31:40,040 Speaker 1: could it could in the listing on the MLS that 589 00:31:40,080 --> 00:31:42,240 Speaker 1: it's one percent is just basically never done. 590 00:31:42,320 --> 00:31:45,320 Speaker 3: It's basically never done. That's right. There are companies that 591 00:31:45,440 --> 00:31:48,080 Speaker 3: do this that agree. I think redfin is one of 592 00:31:48,120 --> 00:31:52,160 Speaker 3: them that do do this. Why they can't operate in 593 00:31:52,200 --> 00:31:54,640 Speaker 3: a state like Utah, I'm not sure, but there are 594 00:31:54,720 --> 00:31:58,040 Speaker 3: companies operating in some states and it's a company wide position, 595 00:31:58,160 --> 00:32:00,360 Speaker 3: if that makes sense. You know the strain. Which thing 596 00:32:00,440 --> 00:32:03,040 Speaker 3: is you mentioned? Well, would you be worried as a 597 00:32:03,080 --> 00:32:06,240 Speaker 3: seller that no buyers agents would visit you? I think 598 00:32:06,280 --> 00:32:09,440 Speaker 3: that does go on, but I think increasingly with the 599 00:32:09,480 --> 00:32:14,240 Speaker 3: information that prospective buyers have, I'm not as concerned about 600 00:32:14,240 --> 00:32:17,000 Speaker 3: that as long as it's on the MLS, because I 601 00:32:17,040 --> 00:32:19,680 Speaker 3: can just tell my agent, like, take me to this house. 602 00:32:19,760 --> 00:32:21,800 Speaker 3: I saw it online. It has two bedrooms and one 603 00:32:21,840 --> 00:32:24,920 Speaker 3: and a half pass. I want to see this house, right, Yeah, 604 00:32:24,960 --> 00:32:27,280 Speaker 3: So I don't know. One concern I have is that 605 00:32:27,400 --> 00:32:30,480 Speaker 3: consumers perceive some authority on the part of their realtors 606 00:32:31,000 --> 00:32:33,320 Speaker 3: and they don't realize they're really the ones in control, 607 00:32:33,880 --> 00:32:35,600 Speaker 3: and so they can just say I want to get 608 00:32:35,640 --> 00:32:38,640 Speaker 3: into this place. I want you to you know. So, yeah, 609 00:32:38,640 --> 00:32:41,080 Speaker 3: but it does sound like that goes on. Is that, oh, well, 610 00:32:41,280 --> 00:32:44,000 Speaker 3: then the buyer's agent won't go there. I don't see 611 00:32:44,040 --> 00:32:47,080 Speaker 3: why it should go on given the information that most 612 00:32:47,080 --> 00:32:49,720 Speaker 3: home buyers have, except that they trust the expertise of 613 00:32:49,760 --> 00:32:50,600 Speaker 3: their realtor. 614 00:32:51,360 --> 00:32:53,479 Speaker 1: I just have one last question, which is, Okay, this 615 00:32:53,720 --> 00:32:57,480 Speaker 1: was a civil suit in Missouri, As you mentioned, there 616 00:32:57,480 --> 00:33:00,120 Speaker 1: are other suits. What would it take for this to 617 00:33:00,160 --> 00:33:03,600 Speaker 1: be a national change to the industry, because does this 618 00:33:03,760 --> 00:33:07,040 Speaker 1: just affect realtors in Missouri? What or how what is 619 00:33:07,080 --> 00:33:09,600 Speaker 1: the scope of the ruling. 620 00:33:10,200 --> 00:33:13,560 Speaker 3: I think it would affect as setting a precedent. So 621 00:33:13,600 --> 00:33:17,120 Speaker 3: it may be that the scope of that case in 622 00:33:17,160 --> 00:33:21,760 Speaker 3: particular is specifically Missouri. But then there's a precedent, ok right, 623 00:33:21,840 --> 00:33:24,080 Speaker 3: And so then I know in other states, Hey, the 624 00:33:24,160 --> 00:33:26,160 Speaker 3: legwork to get you know, maybe do we have to 625 00:33:26,160 --> 00:33:28,040 Speaker 3: do the same lawsuit? Fine, we got to do it, 626 00:33:28,080 --> 00:33:31,560 Speaker 3: but there's precedent got and if that precedent holds up, 627 00:33:31,680 --> 00:33:33,640 Speaker 3: it's not a big you know, you know, the realtors 628 00:33:33,720 --> 00:33:34,880 Speaker 3: might just say we're not going to do that because 629 00:33:34,880 --> 00:33:36,880 Speaker 3: we don't want to deal with this suit because it's 630 00:33:36,920 --> 00:33:37,520 Speaker 3: the precedent. 631 00:33:38,200 --> 00:33:41,040 Speaker 2: And then there's the Gibson case which has been filed 632 00:33:41,120 --> 00:33:43,760 Speaker 2: in Missouri, like the Sitzer Burnett case, but I think 633 00:33:43,800 --> 00:33:48,000 Speaker 2: that one is for national damages and I think I've 634 00:33:48,040 --> 00:33:50,640 Speaker 2: seen a number floating around there of up to two 635 00:33:50,760 --> 00:33:55,160 Speaker 2: hundred billion dollars in damages, which is pretty sizable. But 636 00:33:55,280 --> 00:33:58,680 Speaker 2: also to Andrew's point, if there's anything I know about 637 00:33:58,680 --> 00:34:02,240 Speaker 2: class action lawyers, it's that once there's precedent, there will 638 00:34:02,280 --> 00:34:03,400 Speaker 2: be more lawsuits. 639 00:34:03,680 --> 00:34:06,280 Speaker 1: Yeah, Andrew Gan, thank you so much. That was a 640 00:34:06,320 --> 00:34:10,239 Speaker 1: great explanation, and now I have some understanding of how 641 00:34:10,280 --> 00:34:13,480 Speaker 1: this market actually works. Really appreciate you coming on oddlocks. 642 00:34:13,680 --> 00:34:15,799 Speaker 3: Thank you so much for having me. Really appreciate the time. 643 00:34:15,880 --> 00:34:17,520 Speaker 2: Thanks Sandra Joe. That was fun. 644 00:34:29,880 --> 00:34:31,760 Speaker 1: You know what sort of blows in my mind tracing 645 00:34:32,120 --> 00:34:34,880 Speaker 1: that so many real estate sales are public and you 646 00:34:34,920 --> 00:34:36,720 Speaker 1: can just see the price people paid for their houses. 647 00:34:36,800 --> 00:34:38,240 Speaker 2: Oh yeah, it is pretty weird. 648 00:34:38,440 --> 00:34:40,440 Speaker 1: It's weird, right, I mean, you think it's sort of 649 00:34:40,440 --> 00:34:42,759 Speaker 1: a personal thing and people don't really know, but it's 650 00:34:42,800 --> 00:34:44,719 Speaker 1: all right there online. It takes about two seconds to 651 00:34:44,800 --> 00:34:47,120 Speaker 1: figure out how much almost anyone paid for their huse. 652 00:34:47,200 --> 00:34:47,359 Speaker 3: Yeah. 653 00:34:47,400 --> 00:34:51,960 Speaker 2: I find housing a weirdly opaque and transparent market. At 654 00:34:51,960 --> 00:34:54,600 Speaker 2: the same time, it's like there are all these things 655 00:34:54,840 --> 00:34:59,160 Speaker 2: embedded in the house purchase process, like the commission, which 656 00:34:59,200 --> 00:35:02,160 Speaker 2: you don't necessari see broken out, but then you can 657 00:35:02,200 --> 00:35:07,160 Speaker 2: see really sensitive numbers like the overall sales price. It's weird. 658 00:35:07,880 --> 00:35:11,560 Speaker 1: I remember as a kid when my parents bought a house. 659 00:35:11,600 --> 00:35:14,240 Speaker 1: I forget when or where, you know, going from house 660 00:35:14,280 --> 00:35:16,920 Speaker 1: to house to house to house in a drive and 661 00:35:17,000 --> 00:35:19,840 Speaker 1: maybe driving behind the realtor's car, going in the realtor's 662 00:35:19,880 --> 00:35:24,320 Speaker 1: car to all these different houses. It does seem crazy 663 00:35:24,400 --> 00:35:29,080 Speaker 1: to me that the commission structure hasn't changed much at all, 664 00:35:29,200 --> 00:35:34,520 Speaker 1: or if at all, despite the proliferation of these online marketplaces. 665 00:35:33,960 --> 00:35:37,680 Speaker 2: Now absolutely, because nowadays you can see a house online 666 00:35:37,920 --> 00:35:40,520 Speaker 2: on Zillow or something like that, and you just shoot 667 00:35:40,520 --> 00:35:43,080 Speaker 2: a little inquiry form over and you say I want 668 00:35:43,080 --> 00:35:45,719 Speaker 2: to see this house, and then someone lets you in 669 00:35:45,840 --> 00:35:49,040 Speaker 2: the front door. But that seems to be pretty much 670 00:35:49,040 --> 00:35:52,839 Speaker 2: the extent of realtor services sometimes, and I do think 671 00:35:53,000 --> 00:35:55,960 Speaker 2: Andrew touched on this, but I do think the argument 672 00:35:56,040 --> 00:35:59,680 Speaker 2: for unbundling more of those. So maybe you don't have 673 00:35:59,760 --> 00:36:03,640 Speaker 2: a buying agent, maybe you start to substitute a real 674 00:36:03,760 --> 00:36:06,240 Speaker 2: estate attorney for some of the things that a realtor 675 00:36:06,440 --> 00:36:11,160 Speaker 2: historically was doing. That seems like a possibility totally. 676 00:36:11,360 --> 00:36:14,200 Speaker 1: On one hand, it seems very intuitive to me that 677 00:36:14,920 --> 00:36:18,680 Speaker 1: just over time. Shouldn't there be more of these, maybe 678 00:36:18,680 --> 00:36:23,240 Speaker 1: discount brokerage models for real estate where you get remitted 679 00:36:23,280 --> 00:36:25,680 Speaker 1: back part of the three percent, just a flat fee, 680 00:36:26,040 --> 00:36:29,040 Speaker 1: pay by the hour, et cetera. But on the other hand, 681 00:36:29,760 --> 00:36:33,840 Speaker 1: as long as the fee is basically hidden to the buyer, 682 00:36:33,920 --> 00:36:35,520 Speaker 1: it's just part of the house price. 683 00:36:35,320 --> 00:36:37,279 Speaker 2: And you have no opportunity to negotiate it. 684 00:36:37,360 --> 00:36:40,000 Speaker 1: Yeah, and you have no opportunity, but also no real 685 00:36:40,080 --> 00:36:42,600 Speaker 1: reason too. It's like, oh, there's a million dollar house 686 00:36:42,680 --> 00:36:45,959 Speaker 1: for sale. I don't the buyer doesn't have to think 687 00:36:45,960 --> 00:36:48,800 Speaker 1: about the brokerage fee because it comes out of the cellar. 688 00:36:49,200 --> 00:36:53,560 Speaker 1: You could see a why alternative models don't just take 689 00:36:53,600 --> 00:36:56,319 Speaker 1: off because they're obviously appealing to the buyer who doesn't 690 00:36:56,320 --> 00:36:58,080 Speaker 1: even really think about the fee in the first place. 691 00:36:58,280 --> 00:37:01,200 Speaker 1: And b maybe that helps explain why the first lawsuits 692 00:37:01,239 --> 00:37:02,600 Speaker 1: came from the seller side. 693 00:37:02,760 --> 00:37:06,040 Speaker 2: Ah, that makes sense. And also, I mean this is 694 00:37:06,080 --> 00:37:09,719 Speaker 2: really a story of incentives, right, and the incentives that 695 00:37:10,000 --> 00:37:13,239 Speaker 2: the listing and the buying agents actually have. And I 696 00:37:13,280 --> 00:37:16,600 Speaker 2: think you can kind of also understand why, on the 697 00:37:16,600 --> 00:37:20,879 Speaker 2: one hand, this industry can appear to be competitive, like 698 00:37:21,040 --> 00:37:25,439 Speaker 2: the barriers to entry are probably not that high like, yes, 699 00:37:25,480 --> 00:37:27,399 Speaker 2: you need a college degree, but then you can take 700 00:37:27,760 --> 00:37:30,759 Speaker 2: a National Association of realchair's course and get your foot 701 00:37:30,760 --> 00:37:34,560 Speaker 2: in the door reasonably quickly. But on the other hand, 702 00:37:34,760 --> 00:37:39,040 Speaker 2: like the incentive to keep prices as high as possible, 703 00:37:39,640 --> 00:37:42,960 Speaker 2: it's there in a commission based system for obvious reasons, 704 00:37:43,600 --> 00:37:46,720 Speaker 2: and it does feel like in that sort of structure 705 00:37:46,760 --> 00:37:50,719 Speaker 2: you kind of need an external entity to affect change, right, 706 00:37:50,760 --> 00:37:53,319 Speaker 2: because otherwise no one is incentivized to do it, not 707 00:37:53,400 --> 00:37:57,719 Speaker 2: even the like new discount if you had discount brokerages 708 00:37:57,800 --> 00:37:58,560 Speaker 2: or something like that. 709 00:37:58,719 --> 00:38:03,040 Speaker 1: The existence of them uses themselves are really fascinating. 710 00:38:03,080 --> 00:38:05,120 Speaker 2: I know, I want to look at an MLS. 711 00:38:05,239 --> 00:38:07,319 Speaker 1: Yeah, they won't let you. There's no way. You can 712 00:38:07,560 --> 00:38:09,480 Speaker 1: get your real estate license then you can look at. 713 00:38:09,360 --> 00:38:11,840 Speaker 2: But no, it's like, okay, the one I will Joe. 714 00:38:12,000 --> 00:38:15,040 Speaker 1: On the one hand, it's market transparency. They're all there, 715 00:38:15,080 --> 00:38:17,920 Speaker 1: so that's good. On the other hand, only some people 716 00:38:18,000 --> 00:38:19,840 Speaker 1: can access it, and if you do access it, you 717 00:38:19,880 --> 00:38:24,160 Speaker 1: have to sort of basically enter into these byzantine commission structures. 718 00:38:24,440 --> 00:38:26,400 Speaker 1: Lots of stuff. They're related to market power. 719 00:38:26,560 --> 00:38:30,239 Speaker 2: Yeah, shout out to my realtor who fed our koyfish 720 00:38:30,360 --> 00:38:31,600 Speaker 2: until we could get to the house. 721 00:38:31,880 --> 00:38:34,040 Speaker 1: That's value. That's it's a value. 722 00:38:34,080 --> 00:38:36,719 Speaker 2: Add yeah, appreciate it all right? Shall we leave it there? 723 00:38:36,800 --> 00:38:37,560 Speaker 1: Let's leave it there. 724 00:38:37,880 --> 00:38:40,840 Speaker 2: This has been another episode of the All Thoughts podcast. 725 00:38:40,920 --> 00:38:44,240 Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway. 726 00:38:43,920 --> 00:38:46,800 Speaker 1: And I'm joll Wisenthal. You can follow me at the Stalwart. 727 00:38:46,960 --> 00:38:50,480 Speaker 1: Follow our producers Carmen Rodriguez at Carmen armand dash Ol 728 00:38:50,480 --> 00:38:54,680 Speaker 1: Bennett at Dashbot and kel Brooks at kel Brooks. For 729 00:38:54,760 --> 00:38:57,320 Speaker 1: more Odd Lots content, go to Bloomberg dot com slash 730 00:38:57,360 --> 00:39:01,040 Speaker 1: odd Lots, where we blog have transcripts and letter and 731 00:39:01,760 --> 00:39:04,279 Speaker 1: chat about this episode in the real estate room of 732 00:39:04,360 --> 00:39:09,239 Speaker 1: the Discord Discord dot gg slashdots. 733 00:39:08,840 --> 00:39:11,480 Speaker 2: And if you enjoy odd Lots, if you like it 734 00:39:11,560 --> 00:39:13,800 Speaker 2: when we do deep dives into the structure of the 735 00:39:13,880 --> 00:39:17,000 Speaker 2: US housing market, then please leave us a positive review 736 00:39:17,239 --> 00:39:20,000 Speaker 2: on your favorite podcast platform. Thanks for listening.