YouSaid · the spoken record

Jack Ryan

lines on the record: 98
first: 2024-05-30
most recent: 2024-05-30
sittings or episodes: 1
sources: podcast

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“The price of ceteris parabus, the price of homes, you know, price of home comes down by 10% over the next seven years. Well, that's about 5.5 to 0.6 deflationary impact on the CPI every single year for the next seven or eight years. That's huge. When I say this is the biggest cartel in history of the US.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“These fees go away. Of course, the ROIs for home builders go away, which also drives down rents and also drives down the price of them. So double benefit. But even from, if you're a macro investor, even from a CPI point of view, 40% of the CPI is your either impuded to rental costs or your rental costs.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“We got pretty far. We had three investment banks lined up, and we also had partners involved. So yes, we were pretty far along. It wasn't just like conceptually, it was the six Bulgar firms. We're working on it, so pretty dang close. We were planning to go public in June, and I think they collectively will knock Zillow and Julia and Sada join the National Association of Realtors officially in February. And we've already been working on our PFO. But as you say, correlations never cause a thinkers will have to draw their own conclusions. This industry has to change. It's not good for the American public. Did you know Jack, speaking of some of your listeners and subscribers, you know, some of our macro focus and some of our, I'm sure, are micro focused. But I was mentioning before that, you know, there's like this 5% price tacked on 5% of the price of a homeless tacked on every home, right? So that hurts the housing affordability issue. And then also rents. And then as”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“We're not going to try to guess the next disruptive technology. That's beyond our ken. What we're going to do is wash the sequel to public in the valuations and go, hey, we're doing the same thing. It's kind of clever.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Well, I can't tell what's going through their heads, but I can tell you based on my almost 20 years of goal, and that once someone was successful, you'd have fast followers coming almost every single time. Think of retail, you know, Target or Walmart, how many fast follows you get there, how many fast followers did you get on the stock drink business? How many fast followers did you get all these local Ubers in the world? Of course, it always works that way, right? And so I think that I'd be hard pressed to see a successful IPO over a billion dollars where that's a new way of doing business where people go, hey, I got an idea. Let's just knock that one off. Don't have to be a genius. Let's just knock off what Rex is doing. We're number two, that's an okay spot to be in a $3 trillion industry. If we beat them, that's even better. But let's get into the zone. It's kind of simple. Some people have built their entire business model, probably equity from, especially in Europe, of just saying we're going to look, we're not going to be.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Bristol, we're all bought up, but they were paid premiums. They're all bought up. Consolidate because there's economies of scale. Fees go down. But when I started gold, it was like, oh my gosh, we traded 100 million shares today. Whoa, 100 million shares. Do you believe it? But then when the fees go down to a penny or less, hey, 2 billion shares trader day, right? And by the way, that's lead generation for everything else that Goldman and TV Merit and Schwab do is they were doing trades for his consecutive services. There should be much better off, but they're fighting this kind of last year's war and doing it very vigorously. But I don't think it's in their self-interest. This is just an opinion as opposed to a fact. But I don't think it's in their self-interest to be fighting this back 1990 war to keep fees at these super high rates.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“That should be what happens. Number two, we're okay with that because that builds the credibility of the market. There's only Schwab out there, you can trade shares for free. It's a little suspicious. When you have four or five firms saying, hey, you can do this, then customers go, yeah, of course I should be able to do this. So we aren't, we're okay with fast followers. I don't think the industry was okay with fast followers, right? Because now if you had five or six firms following our business model, it completely abandons the industry. But here's the weird thing, Jack, is if they weren't so focused on trying to keep the industry the same as it was in the 1990s, they'd be benefited by it. You know, it's only through, you know, bad thinking that they go, let's keep things the way they were in the 1990s when stocks went from 12 cents to less than a penny to trade, did firms do worse or better? You know, the market caps the firms, right? They're mostly better. That was their consolidation. Yes, they were like one from like 50 firms to 10 or 12 because the EF Huttons and the paint web.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and by the way, for seven years, we did it fine on Zillow and Julia. And then on the eve of our IPO, suddenly they joined the National Association of Realtors and say, oh, we got to put you somewhere else. By the way, Jack, you know, I think, you know, just like happens in the creative, destructive world in which we live, if you guys like Joseph Schumpeter and all those creative destruction, is that, you know, once we go in public, of course there'd be fast followers, right? Just like, you know, Uber Lyft or all the Lyft claims they went first, but it was making difference if they surpassed one surpassed the other. Or Robinhood, TG Ameritray, Schwab, you know, of course you have fast golden following Schwab as fast as you can at the feast down. Of course. But if we're successful, we'll public a billion dollar bill, oh, I see how you run this play. I might knock it off. Well, one, you know.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“You at Rex Helms, you were representing buyers, sellers, or both You're doing both, and you wanted to do business on Zillow. And Zillow said you're not listed with the National Association of Realtors, so we're going to put you on an other place. So it's basically making it harder for client and people who want to buy homes to access your services.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Let's just say it's less. We can all do the analysis about what's, you know, is it linear? Is it geometric? Is it something like that? It's a lot less. This is why the ecosystem doesn't like people like ourselves trying the fees to zero.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Margin, do you say, Jack? Because in the 21st century, most people are looking for homes on their own. They're not asking the agent to drive them around New York for five weekends or like they were in the 1990s or finding them on their own. They come in again and say, hey, I had free homes and think about you get me in. And then it's that $800,000 home in Ryan, they $24,000. So it's really high margin business without that much work. Anyway, so the buy-side agent will pay a lot for that advertising. But Jack, what happens when the fees and the buy side, if Rex is accessible in its lawsuits saying this is a price fix, go from 2.5% to a Is a thousand dollars $2,000, not 24. Obviously, if the value of that customer drops by 90%, what's the value of that advertising?”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“I understand that Jacqueline. I will give you an answer, but I'll put the caveat because there's going to be feedback after you and I speak about coming to the other side saying, why is Jack telling you about our business model? But I will tell you what I read about in research reports, and that is that most of the revenue comes from advertising and who's advertising on Zillow, the agents who want buy-side business, right? And then longer-term sell-side business, but you're on Zillow because you're looking for a home. Now, some people just do it for fun, in which case that's brand advertising. So when the time comes that they're familiar with their name, but that in terms of like the short-term transaction, the short-term transaction just buys side business because they listed the home they already had a seller and there's this like 3% fee out there or two and a half percent fee 2.75 fee out there for the buy side agent right which is super huge margin business why is it hard”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Well, I am stepping a little bit deeper water than I ought to, especially if people from Zillow are listening, because they'll say, how do you know about our business? But I can only know it's in the public.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“There's the rule of the data exchange, even the rules of the data exchange. The default position is that you have to segregate listings again. You can't put non-listings with non-NR listings. That's just why is there any good business purpose for that? No. The only purpose is to prevent competition. Right. So that's how the feed, that's one of the ways the fees get fixed.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“And the third is get a deal with Nahar or all the MLSs at once, and they just upload the listings. And so before Zillow joined the National Association Realtors, they had about 98%, I think, in terms of, I think, testified. They had 90% of all the listings in the US. How do you do much better than that? But they said they wanted to get more listings. they joined the National Association of Realtors to get the other 2%. But then they lose lists like ours because all of a sudden we have to be on some different page. So you have to do the math about whether that made sense or not. Anyway, so you can get the IDX from the individual members. You can do a group deal with NAR and all the MLSs. Or you can do with the individual agents. Those are three ways to do it. But even the individual IDXs have their own rules. So there's like the rules of the MLS and the NAR.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Worsely, you know, there's three different ways. One is go to every individual agent and say, list your homes with us. It's more visibility. And that's good for your customer and for you. And then in turn, what happens is that aggregator, to use the generic phrase, takes those eyeballs and sells them to advertisers. Look, you have lots of buyers looking for homes. Advertise that you should use Jack Farley residential real estate firm for your buy side transaction and you will charge you $500 for that ad. So that one is individual agents. The second is go to the individual MLSs and say, hey, let's have a contract between you and me, Mr. Aggregator, Mrs. Aggregator, and you send us your listings digitally. There's actually an IDX exchange, like a data exchange that you would be familiar with in terms of how they send information to aggregator, how the aggregator says, yeah, we got the information. And they put it up.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“So MLS is a multiple listing service, Zillow, which is a place people go on to buy or sell or rent real estate. How does Zillow get those listings? Is it other real estate agents registering with them or do they pay MLSs to get that data? Because it's a network effect. The more houses that are listed for sale, the more value, the more valuable it is to other people. So the more people go on the platform. So it's this virtuous cycle. But how does Zillow get its data or other platforms get their data?”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“In the northern suburbs of Chicago. Here's another one for the southern suburbs of Chicago. Here's one of the western suburbs of Chicago, all slightly different rules, although the fundamental ones that fix prices are all the same. And here's one for Chicago itself. It just is just another, they shouldn't exist anymore. And people can, I think like a billboard, they've been driving by it for so long. They don't notice it anymore and how anti-competitive it really is.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“For entertainment or I think frivolity when the conversation doesn't end in a conspiracy against the public or to fix prices. This is in writing in 1760 or whatever, 1770. And he was so right. Anyway, here we are in the 21st century. Buying and selling homes is national in nature. You have 600 of these MLSs that join forces in the 1930s. Let's put aside what their intentions might have been. Let's put, given just the most honest of intentions, that it was to exchange information and paper form so you could make sure the homes were more easily visible to each other. But in the 21st century, to have 600 different little kingdoms that dictate the terms of competition in that little kingdom, it makes it really hard to have something like a citadel or a Nasdaq or New York stock exchange. And why isn't that a violation of the commerce clause to have these 600 MLSs set up and saying, here's the rules by which you compete?”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Another great question. That's just another Archaic. Block the competition that shouldn't exist anymore. So back in that 1900s, Jack, as the population was filling across the country, the 10 or 15 local brokers for the northern suburbs of Chicago would say, hey, in this paper-based world, but they didn't know anything else, they wouldn't say that, let's exchange listings with each other, with fiscal copies. So we'll perform this little group and we'll make sure that everybody knows what homes are for sale so we can get more awareness using each other's networks with people so they can know the home is for sale. That was the putative reason to do it. Now it's also good to have all the competitors in a certain neighborhood all getting together to visit frequently to make sure that the homes and the prices are getting distributed. Adam Smith though has a great quote. He says seldom do people the same industry get together.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Be done oftentimes better than by a bot. Scheduling the home tour, a bot can go around with text messages faster than the human can. You take a boring task away from the human, drive the causeway down, and you get faster agreement that, yes, we're going to meet tomorrow at 4 o'clock with the inspector and everything else. There are many things. And was very transparent for other people too who wanted to compete with us. But what got us in the end was Zillow joining the NAR on the eve of our IPO and then pushing us off into a tab that people would not see and be suspicious of.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“And Morgan Stanley and Cinadel said, unless you join the stock trading cartel, we're not going to give you information on the last trade, the price of the last trade and the volume of shares traded. You're barred, right? The information is essential to doing business, right? You have to publish the price and the volume as you know, but they want to not publish it so only they can have it. And so that also, I can go through the other rules, but those are the three things. The one that we were able to work around it because we were using AI for almost everything. I know that this is a big phrase now or two years ago, but we started out that way. Why? Because we learn from Trey Goldman that you can do, the computers can do many things that humans used to. And that's the same for buying and selling homes. You can't show a home as well digitally as physically, although we were doing that. But almost everything else, you know, it can do.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, you think it's kind of the radioactive pit of homes or something? It's been kind of something suspicious going on. Like this is a, I don't want to buy a home from an other. This feels like I'm putting a big amount of money into something that sounds a little sketchy, right? I mean, they could have said novelisted homes, non-narvested homes, but you will have to ask them as to why they chose other. But we, you know, we are agents. We were agents in every sense of the word. So there's a segregation rule. There's the forced runup of data where when you sign your selling agreement, which are the selling agreements are usually put together by that local association of realtors, they say you must hand over all the data on your home to the local association of realtors or MLS. And they copyright and call it their own and they won't give the data to anybody else. So why is that important? In the 21st century, imagine if Mary Lynch and Goldman.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“States were in about 20 states. We passed all the Asian tests for do you understand the business and are your background checks copacetic? Yes. We put on a tab called other as if we're not real estate agents and brokers. So we got double whammied. One is people don't see us and that they do see us and think we're not agents.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“I kind of learning from Goldman and brought them over to the home trading business. But there's a thing called the segregation rule. I don't think people realize that Zillow, which had said it was going to be on the side of the consumer, joined the National Association of Realtors on the eve of our IPO and started enforcing the segregation rule. What's the segregation rule? The segregation rule is if your home is listed by an MLS company, you can be put on the main page where most of the homes are. But if you are not part of the National Association of Realtors, then you get put on the segregated, put on a separate tab. Everybody knows that once you go on a separate tab, which is not where most of the eyeballs go, then all of a sudden you're really hurt. Our views went down by 80 to 90 percent. They created a tab called agents, another tab called other. Other sounds like you're not an agent. Well, we pass all the licensing tests.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“There's a number of things to talk about. To make the analogy just really clear, if you see somebody levitating in Las Vegas five feet off the ground, it's not levitating. I guarantee there's string's involved. Okay, I don't believe that just levitating they're on its own, right? And if prices are levitating at 5.5% in the US, they're lower everywhere else. Do not believe that aren't strings. And you're asking me, what are those strings? That's levitating the sprice. So one is the buyer broker commission rule that I just described, which I know sounds complicated and a little bit hard to put your head around because it is hard to get your head around because no other industry works that way. So it doesn't come naturally to you or your listeners. Second is the segregation rule, which is what they got Rex on. Rex is going public at about a billion dollar valuation. We are charging 2% going to zero just the way Robin Hood and TD Meritray and Schwab was doing. And what we...”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“So, those companies you mentioned Polte, Lenar, those are publicly traded home builders, so they very large companies that build homes in the US, ROIs return on investment. You're saying that they basically would make a lot more money per house and therefore would build more houses if they didn't have this fee that everyone is paying how is it possible that there isn't competition. So if fixing fees is formally illegal. And other countries have much lower fees, and there's competition in other countries. I don't know if it's NAR or other institutions. How do they maintain that grip on the market and make sure that the fees are very fixed? In other words, what is keeping the fees where they are when it's not happening in Denmark or Sweden where the rates are much, much lower.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Don't have this 3% artificial fee on the buy side. Their margins go from 12 to 15%. How many more homes get built when all of a sudden your ROI goes up by 30% and your margins go up by 30%? So maybe if your listeners have interest, we can talk about what stocks this affects and positively and negatively, but how many more homes? And that's the margin of the public companies, which have huge economies of scale. The middle kind of private home builder, it's about 8%, 7% margins. What happens when their margins are about 10%? How many more homes get built when your margins are 10%, not 7%, your ROI is 15%, not 10%, right? It's dramatic. So that will also reduce the price of renting as more supply of homes on the market as their margins and the ROIs go up for building homes.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Well, Jack, let's take the rent in the monopolistic word of the word rent and take the 4% times $3 trillion, $120 billion every year transferred from middle class Americans to realtors. Over the next 10 years, probably over with inflation probably between $1.5 to $2 trillion over the next 10 years for middle class Americans. Think of just the deadweight loss that from an economic point of view. By the way, it also affects renters. Why? Because renters, someone who bought that brownstone in New York and now is renting out those four different levels, they had to pay that five percent fee too and then make their ROI on that higher investment, right? Everyone bought their home for 5% less. Guess what? The market drives rents down by five percent. And by the way, it's not just the 5%, which is this kind of rent that would go away in a competitive market. But second is what happens when Pulti or Lenars or Hortons, the public stocks.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“So, it is arcane in terms of complex, but it really matters to so many people. I mean, what 60% of people are homeowners? This really imagines the majority of Americans, which you can't really say about NVIDIA's earnings. I mean, yes, it's interesting and it is a bigger percentage of the S&P 500, but it's not going to change your life. Whereas 1% on a housing transaction, that's a lot of money.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Telling my customer the home was sold. Or I'm telling all my people in this neighborhood or in this MLS. And I have to do business with you. You're done in this town. I can go more on this if you have interest, but I'm trying to make it sure that your audience. Stays engaged on an arcane topic that should not be arcane. It should be as easy and simple as buying an airplane ticket or crossing a train.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Start negotiate on that. When you mix the two together, it's hard for a person who isn't an investment banker or an economist for living to figure out, well, where can I negotiate where I can't? So you go to the Southside agent and say, hey, I want to only pay 2%. Well, first of all, you got to pay that 2.5% on the buy side also. Your home's not going to get shown. And then you really want to take my fee down from two and a half to from 2.5% to 1.5%. All you're doing is getting me because you've changed the fee from 5% to 4%. It doesn't really make a much difference to you. Why are you beating up on me? And so it's not hypothetical when it's theoretical from all the economists that would say the exact same thing. And then let's see how the theory works in practice. And then there's this hundreds of tapes, 600, 700 tapes that we have where people are saying ages are saying, hey, if you don't offer this fee.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“It was a US versus starts with Alex Brown because they're the first in the alphabet and they list the other 50, 60 firms after that. And then they had to stop the informal. Lack of a better word, don't hold me to this price fix. Anyway, the same thing happens in residential real estate today. Oh, you know, the buyer, the seller can offer any fee they want to the buyer as low as a dollar. Okay, so what happens? We offer a dollar. And then the hundreds and hundreds of tapes that the U.S. Department of Justice now has in their possession that says we have people basically threatening us saying, hey, you're not going to last long in this town if you're offering, you're not offering that buy site commission. By the way, that'd be two and a half to three percent else it's curtains for you as a business person in this town, right? So yeah, you can offer a penny if you want or a dollar, I should say. But then what happens? The house doesn't get. So furthermore, this thing in economics called salience. When you mix these two fees together, it's hard to separate them and have people negotiate fairly on both fees. That's what economists call salience. Can you see the price and the service?”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Formal agreement that you must charge 12 cents. But the problem was Goldman Sachs was on the sell side at one moment, the buy side the next, right? And you're dealing with like seven firms over and over again in the jurisdiction or the area where Goldman tried to make a market. And so today you're the buyer tomorrow or the seller. Anyway, if you tried to sell shares less than 12 cents back in 19 trade shares, I sell trade shifts less than 92 cents in 1997, 1998. Your competitors partner run the trade desk would call your partner in the trade desk and say, hey, Jack Ryan's academy unprofessionally. Oh, really what? He's Chrome shares less than an eighth. Tell him to knock it off. It's unprofessional. You know, there was no formal agreement that he had to charge twelve cents.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“You referenced stock brokers, and I have two, and just to give you a sense for the analogy in 1997, 1998, I think it was the U.S. Department of Justice sued the NASDAQ dealers because the price for trading shares was 12 cents. There was never a”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Long before the settlement. They are and will remain entirely negotiable between brokers and their clients. And housing prices are dictated by market forces beyond members control, yada, yada, yada. So NAR says we don't fix rates. We don't set commissions and it's all market prices. In the empirical data we know it is often 6%, five and a half percent. Jack, can you help me and our audience here today explain that disparity between NAR doesn't set rates, but then the rates have the effect of being fixed?”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“They used to have a specific fixed commission. The Justice Department in 1947 hit them within the National Association of Real Estate with an antitrust suit. And here we are nearly 80 years later and NAR, National Association of Real Estate, they have, according to Bloomberg, dutifully abandoned their formal rate schedule. So they don't have, you have to do this. Instead, they just have recommendations or suggestions. And I'll also go into National Association of Realtors website about here's what the media gets wrong about the fact that National Association of Realtors settled. By the way, they settled for 418 million dollars with various groups. And you have your lawsuit still pending. This is the quote from the National Association of Realtors, NAR. Quote, NAR does not set commissions and commissions are negotiable and were negotiable.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Right. So in the investment banking example you brought up, and you obviously have experience in that, it is common for, let's say Morgan Stanley to get a fee of raising money, i.e. selling equity or debt to the investment public, they would get a percentage of that. You say it's less common for there to be a buying. But even if there is some sort of consulting arrangement, there's no agreements where 3% of every investment banking deal is done. If it's a risky deal, a high yield deal, I believe it's the case, you get paid more. Apple raising bonds, you're going to pay a much lower percentage as a percentage. And it's competitive. If there's investment bank A, investment bank B, investment bank A is going to cost more money. Let's go with investment bank B. Okay, we'll make the difference on our perceived other skill, of their reputation, and the like, but it's not a cartel, at least in that regard. So I looked a little bit into the history of the National Association of Real Estate Boards and going all the way back to the 19th.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“That is because you only get paid if you win the bid and then you get the fee. You know, there's so many things that we can go on about this and I don't want to bore you or your viewers. But yes, it's unethical and wrong that you're getting paid by the other side because it makes the agent principle problems even more dramatic. And that's why other industries abandoned other than this one, apparently.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Yes, they have a fiduciary duty to the buyer, right? This is why this system is so anti-competitive, but also just so awful. Is the buyer agent is supposed to put the buyer first? Just like if you're representing the defense in a lawsuit, not allowed to get paid by the plaintiff is satisfied with your services will give you the fee at the end of the case. Why is that against the ethical rules in the legal profession? Same with Goldman's investment banking. Can you imagine if we were to pay Morgan Stanley, if you find a buyer for this business, we'll pay you 2% of the proceeds. I thought they were representing the buyer. There could be incentivized to tell the buyer you better pay $2 billion because there's a lot of competition and you won't get it if you offer 1.8. Well, is that because you really think?”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“The fact that buying agents, the agents representing someone who wants to buy a property, will have to get in on a commission or get a guaranteed commission. Otherwise, they won't show their client the property. Oh, 50 Melrose Street, that looks great. Oh, I'm not getting my guaranteed commission. I'm not going to show my client that. You know that that happens, at least in some instances, and I know that that happens. And you have the proof to have it. And you shared it with me. We'll share that in a moment.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Maybe some of you guys aren't lawyers on the phone. If all the competitors get together and say, if you buy this one service, you must therefore buy another service and all the competitors agree to that. That's an antitrust problem, right? Imagine Goldman Sachs, Morgan Stanley, Merrill Lynch, and Senate all got together and said, hey, if you want to use us to sell shares, you've also got to pay an agent on the buy side for Jack to buy those shares. Like you couldn't do that. That's legal time right now. Second thing is it allows the price fix because they say to you if you don't offer two and a half to three percent on the buy side, the buy side agent will steer the customer away from your home because they're trying to maximize their revenue per transaction. So if you're offering one and a half or two percent and everyone else is offering two and a half to three percent, well, guess what happens to your home? Doesn't get shown, right? Because they're trying to maximize their profitability. So you better pay two and a half to three percent if that's.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Posed the question okay, how does it work? Well, basically, the 5.5% fee gets split or 6%. By the way, in Iowa, it's like 7%, depends on the geography, but it's always five and a half to 7%. And I said it doesn't really change by geography. It doesn't change down by geography. It only goes up from 5.5%. But anyway, how did that fee get separated? The sell side agent tells the seller that now they have to buy their services to sell their home. But they also must buy a separate service, which is called paying for a buyer's agent for a buyer who you don't know who may not even need a buyer's agent, especially in the age of the web when all the information on the buy side is available and free, kind of like buying stocks nowadays. But you're required to use an agent on the buying side. So number one, illegal tying arrangement, and this is maybe for the”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Jack, it's complicated for a reason, it's because we have a trade group setting the rules of competition. They want to put all these rules in place. By the way, no other trade group in the U.S. has allowed to set the terms of competition. Why should this one be allowed to? It's de facto on its own two feet, it's anti-competitive, just the very nature. And then you ask a good question, why it's really complicated. You're saying this, Jack, a really smart guy. We have the data to prove you're a really smart guy. And it's confusing you. Why is it confusing Jack Farley? Because it's designed to be complicated by the National Association of Realtors. They set up all these rules that are really hard to understand. They don't make common sense because they're not designed to provide common sense. It's designed to prop up prices. And so you can't really understand it. So you're not below average intelligence or anything is by design.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“So, the National Association of Realtors NAR is a cartel in stockbroking, yes, it's basically now free to execute trades. The price of executing trades has gone down and down and down. And if I want a haircut, I could get a cheap one that costs 15 bucks, just a buzz cut. There's a much more expensive option. But in the world of real estate, five and a half or six percent of every transaction goes to the real estate agents, the selling agent, and then the buying agent. And it's a little complicated. I've never bought property myself. So you can guide me and our viewers through it. But why is it that pretty much every transaction that happens, the seller and the buyer and agent share 5.5% of every transaction?”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Of trades per year. And now speaking with Goldman Sachs, a brokerage hour go, but it's not 4% is the difference between the UK and the US. Let's just assume for a second that we'd only charge the same as the UK, but it should be lower because of economies of scale in the US. Like almost every other service is in the US. Let's just assume it just matches the UK price is 4% on free trillion of transactions per year. So it's huge. $120 billion of takings every single year, bigger than OPEC. So why are we doing it? Because why am we doing it? Because it's not right for consumers. It's not right for homeowners. It's not right for the U.S. economy. It wasn't right for Rex because we were doing the same thing that we did at Goldman, bring the brokerage fees way down by 90%, which can be done except for the rules of the cartel that prevent that from happening.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Goldman, you know, or any law firm, the people who were junior weren't compensated as well as people who were senior because they have more reps. They know what they're doing better, right? It's always the same fee, but probably the most damning thing is the fact that in almost every other developed country, the fees are 80% less in the UK. It's 1.5%, Sweden, Finland, Picasia, Hong Kong, Singapore, Malaysia. Why is it that the US, the fees are three to four times higher than most other places in the developed world? And so I won't bore your listeners with all the other data, but when you see this levitation act on prices that defies time, that defines geography, that defies talent levels. It's always the same fee. You know there's a price fix. And it's a price fix on $3 trillion.”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT
“Think this might be interesting to your listeners. The residential real estate business in terms of the agency brokerage business is what I say and I can bring the data, the largest cartel in the US. And it sounds like I'm overstating things or exaggerating in some way, but I'm really not. And ask yourself this question. Why is the fee always 5.5%? Like whether it's a $300,000 home, a $3 million home or a $30 million home, what's the fee? five and a half percent what's the fee even though every other internet intermediary uh they've been i guess disintermediated by the way all their fees are down 89 taxi dispatchers stock brokers etc one isn't why is that why is it the same fee in a good economy or bad economy why is it the same fee with its austerity why is it the same fee that's a first year associated or 30 year veteran you know what”
2024-05-30 · Forward Guidance · Jack Ryan on The Housing Cartel That's Stifling The American Economy · IDENTIFIED FROM THE TRANSCRIPT