Joe Cass   00:00:00

Hello, and welcome. My name is Joe Cass. I'm a Senior Director here at S&P Global Ratings. I'm the host and the creator of the FI15 podcast. On this episode, we have Ryan Serhant, Founder and CEO of SERHANT, and Gregg Lemos-Stein, Chief Analytical Officer, Corporate Ratings at S&P Global Ratings. A very quick reminder that the views of the external guests are their views alone, and they do not represent the views of S&P Global Ratings. Ryan, can you just kick us off with an overview of your career to date in real estate, from entering the business as a novice to what you're looking to achieve right now with SERHANT?

Ryan Serhant   00:00:33

Of course. I entered the business on the day that Lehman Brothers filed for bankruptcy on September 15, 2008, mostly because I had run out of money, and I didn’t want to move home to Colorado. I wanted to stay in New York, and a friend told me, “Get your real estate license, you can help people rent apartments. Over 70% of the homes in New York City are rental apartments, and it’s better than being a bartender or a waiter. You can control your schedule, sort of.” And I fell in love with the business. I fell in love with real estate. I fell in love with brokerage, working with customers looking to do lots of different types of things. I got on to a TV show that most people know me from, called Million Dollar Listing New York on Bravo, in 2010. I did that for 10 years, alongside multiple other TV shows, and started writing books. I’ve written three books now, and we have an education business that teaches sales training to salespeople and to sales enterprises around the world. We also have a production company that does real estate production. So, I built a large sales team through 2020. In 2020, I started my own company—not timed with COVID. That just sort of all happened by coincidence. And we’ve now expanded from the end of 2020 until now into eight different states. We have well over 500 agents working with us now, kind of across those states, and have done just over $10 billion in residential real estate sales. We have nearly 30,000 enrollees in our education platform in 128 countries. I left Bravo and Million Dollar Listing New York two years ago and have a new TV show that comes out on Netflix relatively soon.

Joe Cass   00:02:28

Fantastic. Thanks, Ryan. Greg, can you give us an overview of what you're doing right now at S&P Global Ratings and maybe also some kind of high-level perspectives on the U.S. real estate sector.

Gregg Lemos-Stein   00:02:42

Sure, Joe. It's, of course, a big issue. It's been an issue for a while. It will be an issue for quite some time. It's sometimes described as a slow-motion car wreck, particularly within U.S. real estate. We're talking mainly about office, where we've had a seismic change in the way people work, particularly in the U.S. So, it's not really real estate overall. Other sectors, like industrial, logistics, and warehouses, are faring quite well. Multifamily, I understand, has had some weakness lately. All of them are affected by interest rates, but there's a double whammy when valuations are declining and interest rates are rising, and maybe a triple whammy for office because utilization of office space is still creeping up, but still very, very low. So, what we're doing at S&P Global Ratings is we're making sure we're coordinating across the many, many different asset classes that are affected by real estate. It really cuts across many, many, many areas we do, not just corporates, which is an area where I focus on. We rate a lot of REITs that are publicly traded, and those are corporate ratings. But, of course, we also have commercial mortgage-backed securities, and our structured finance colleagues cover that. We also have mortgage REITs. But, of course, there's an impact also on the banking sector. So, our bank analysts, there are varying degrees of real estate exposure among the banks. So, it really calls for coordination among all those senior analysts in those asset classes, and they've been doing that more or less for the last three years, really since these changes became very apparent.

Joe Cass   00:04:25

Ryan, your career, as you mentioned, it started in 2008. So you've seen some ups, you've seen some downs in U.S. and also global real estate markets. What's your forecast or even your expectation for real estate in 2024 and beyond?

Ryan Serhant   00:04:43

We are in a historic low inventory environment that has been written about and reported about ad nauseam. In the United States alone, 90% of all home loans are under 5% rates. So, when rates are still above 5%, it creates a locked-in effect, which is what we saw in 2023. There were fewer home sales in 2023 in the United States than there were in 2009. 2009, I think, if you asked most people pre-2023, they would say, yes, that was probably one of the worst housing markets we've ever seen in recent memory. And 2023 also turned out to be one of the slowest housing markets in over thirty years—nearly thirty years. This year, what we've already started to experience is a little bit of an unlocked effect. If 2023 was locked in, this is a little unlocked. And it's because you can actually predict roughly six months into the future. That was hard in 2022 and 2023. It was difficult to predict what anything would cost over the next six months. Now, inflation seems a little stickier than I think we'd like it to be. But you know, within relative certainty, roughly what interest rates are going to look like over the next couple of months. So, you're either going to move or you're not going to move. And eventually, people need to move. Eventually, the baby boomer generation needs to downsize, which they haven't done since 2020. That's a significant amount of inventory that is only now just starting to come to market. And that will help fuel the inventory issues that we're seeing amongst other kinds of demographics. And I think the moment we see interest rates start to get closer to, and hopefully they do, kind of that 5% marker, you're going to see home prices really escalate. So, what we're telling people now is, if you're a seller, we can't predict the future. Could pricing go up? It seems like it will. But could it go down drastically? Sure. We don't know. And if you're a buyer, could prices go up? Absolutely. Could they go down drastically? We don't know, but there are clear market indications that things are going to get much more expensive should rates come down because there is so much pent-up demand and not nearly enough inventory. So, I think we're going to see a far stronger year for absorption and volume in the housing market than we saw in 2023. And I think we'll end the year with higher pricing, probably somewhere in the 5% to 6% range.

Joe Cass   00:07:30

Thanks, Ryan. Greg, we're speaking, you're speaking to kind of the largest investors, especially on the buy side globally. Interested to know what are the kind of the top three concerns these large global investors are coming to us with on the topic of global real estate.

Gregg Lemos-Stein   00:07:47

Yes, absolutely. It is focused on office. So, Ryan makes some good points about housing more broadly, and I'd be interested also in his take, maybe later on, about the change in the commission structures that may be coming and what impact that might have on pricing. But in terms of what investors are asking us, it is focused on office. And the first question they ask is, "How bad will it get?" because it's still evolving, right? We still have this big gap between utilization of office space and vacancies, which would be actually what tenants are paying in terms of rent. And there's a long tail before lease renewals happen. They tend to be ten-year leases. So, the implication is, if utilization of space is much, much lower, then the vacancy rate would indicate that when lease renewals come up, they're going to take less space. So, there's still some pain to be felt. So, the number one question is, "How bad can it get?" And then the next question, logically, is, "Will that have a big impact crossing over to the banking sector?" And then the next question that logically stems from that is, "Is there more of a systemic risk that would emanate from that, that might have an impact on the broader economy?" Those are the top three questions that we're getting. To answer somewhat, to give a little bit of color, Joe, not just leave that as a question, we have had a number of rating actions on some regional banks. We've had a larger number of rating actions, even dating back two years ago, on the REIT sector, those most exposed to office. So, we've been adjusting our ratings. We've been adjusting our base case for quite some time now. And again, I'm not a banking analyst, but what our banking analysts will tell you is that the commercial real estate exposure, largely for banks, is manageable, but there's a big difference in levels of exposure to CRE. And so, some of the largest banks actually have the smallest amount of exposure as a percentage of their overall assets. It's the smaller regional players that have larger exposures, and those are where we've taken some actions already over the last year or two. Sometimes commercial real estate is not all office, and it may not be office in the most exposed geographies. It might be areas where office space wasn't so absurdly expensive, and CFOs aren't eager to get out of that space. So, you really have to go bank by bank, really area by area. Again, real estate is all about location, right? So, that applies here, too.

Ryan Serhant   00:10:31

I'll also add to that, you make a good point. I read a lot and hear a lot about the fall of office, right? And you see a lot of the big institutional players giving keys back because they don't want to chase good money after bad. And Starwood, Brookfield—you see these major players, so more and more people are doing that. But there's also a big difference between occupancy and vacancy. So, I hear about it in New York all the time. Go to Midtown, all these lights are off. Occupancy must be down, right? There's no one's here, no one's going to the office. The spaces may be vacant, but the leases are fully occupied. There's a lot of office that is fully leased, but people just aren't coming. And so, I think what people are trying and what a lot of these big institutional owners and even just these offices themselves are trying to do, is try to get to three days a week of office. If you can get to three days a week of office, you can fund your facilities, you can get these buildings moving relatively productively. But if you're just at two days a week or one day a week, you have a really, really hard time. And I heard somebody say recently that this is now all because a lot of our nouns have become verbs. It used to be that you'd go to the shop. Now you shop on your phone. It used to be that I got to go to work. Now you just work, work. I've worked. And so, I think it's an important thing because I think, in terms of occupancy in New York office, I think it's over 90%. A lot of the spaces look vacant, but those leases are occupied.

Joe Cass   00:12:25

Fantastic. Thank you both. And Ryan, just to kind of pick up on something Gregg said, do you have any kind of comment or view on the recent commission change announcement? I'm quite kind of uneducated on this side. If you could provide kind of an overview of what happened and maybe your take on it.

Ryan Serhant   00:12:44

Sure. So, there was a class action lawsuit that was filed in the state of Missouri years ago that was basically saying that the National Association of Realtors, the largest kind of trade union for real estate agents, was colluding with the largest brokerages and local MLSs to price-fix commission payments to buyers' agents. And what was happening was that if an agent was going to a seller, they'd say the best way to sell your home would be to put it on the MLS. But to put it on the MLS, we have to offer compensation to the buyer's agent. Those are the National Association of Realtor rules. That's what you have to do. And so, if you're going to pay a 6% commission, it's 3% and 3%. That way, the buyer's agent is also protected. That way, you never have to have commission conversations with buyers. The seller pays it, and it's what's happened for decades. It's how it's always been. And it's not that the seller is unfairly paying a buyer's agent who didn't do any work. Just that fee has always been in the United States on the seller. So, when you're a buyer, you don't pay it, but when you're a seller, you pay it. And usually, most people buy a home and don't live there for the next eighty years. They buy it, and they don't pay that fee. When they go to sell it, they do pay the fee. So, the fee just gets passed on. So, that's what the class action lawsuit was about. The National Association of Realtors and the big brokerages did not succeed in explaining the reasons why that would be a good thing for the marketplace, and so they lost. What happened on Friday was that the National Association of Realtors basically came out and said they would not appeal the verdict. They're going to settle for something over $400 million to be paid out over the course of the next four years and will be changing the rules. The rules will change to where a seller no longer is obligated to pay the buyer's agent should the buyer have an agent. You don't have to advertise that you'll pay. You can pay 0% if you want. Now, that's kind of always the way it's been. I mean, in New York, we don't have an MLS. We're also not a part of the National Association of Realtors in New York. So, New York City is very different. We have customers who will pay 10% to get something sold. We also have customers who will pay 0%. But around the country, it's always a different case. So, what's going to change now is that buyers' agents, if you're working with a buyer and you're a real estate agent, will get a buyer's representation agreement that states how you are compensated. If you are showing homes where the seller is not willing to compensate a buyer's agent, you will go to the buyer for your compensation. And so, you'll be just very clear and very transparent as to where fees come from, which is the way it's always been before. This will create a little extra paperwork, and it will be interesting to see what it does to the marketplace. My prediction is that fees will get higher and more properties will start to trade off-market. That's because that's what happens around the world outside of the United States. So, as much as we want to think that these new rules will be better for the consumer, what happens around the world is that off-market transactions end up becoming more of the norm. And when you do that, then there's no transparency because people just set whatever fees they want. So, I think you'll see more of that, but it remains to be seen. The settlement was announced last week. A judge still has to approve it. That will take a couple of months, probably sometime into the summer. But it doesn't change that commissions are paid out. It doesn't change that a seller is allowed to pay whatever they want to whomever they want. They're free to do that. It just creates a document of transparency, which I think is actually probably good and the right thing for the market.

Joe Cass   00:16:53

Great. Thanks, Ryan. Ryan, you've got a really significant online presence with over 6 million followers across all the platforms. Do you believe that other players in the real estate industry, such as developers, investors, companies, are they effectively utilizing their own online presence?

Ryan Serhant   00:17:16

I think they try to. I don't think other players really look at their digital presence as one of their value propositions because it never had to be previously. I think there are two types of real estate firms right now. I think there are those that are defending where we've been, and I think there are those who are building where we're going. I'm an active real estate agent all day, every day. I'm also a CEO of a firm, and I understand what it means to be every single agent that works with me. When I was looking to start my own company and we started SERHANT in 2020, I spent a year interviewing with other firms—all of them. All the big names and small names, national franchises, everybody. And what I realized was that all of the other real estate firms that I interviewed with are licensing housing firms that hold your license, and that's about it. Their number one pitch is: "If you come to us and hang your license with us, we're going to make you better." And I, as an actual agent, always felt that a real estate firm's job shouldn't be to make my agents better, but it should be to be better for my agents. Because that's the pitch that I always give to every customer I work with—every buyer, every seller, every developer. I don't sit with them and say, "Hey, work with me. I'm going to make you a better seller. Work with me. I want to make you a better developer." But that's the pitch that real estate brokerages give. At SERHANT, we are the most-followed real estate brokerage in the world. We use television, streaming, every social media platform, books, speaking engagements, and our own production company to amplify our brand to the benefit of our customers' brands and our agents' brands. If you were to audit our business, you would probably say that we are a media company that sells real estate. I learned a long time ago that if you can build a strong content-to-commerce business for makeup, you can do it for real estate. But you have to understand that there is a new "C" in between content and commerce: content to community to commerce. No one had ever done that for real estate before. When we started SERHANT, that was one of our immediate value propositions, outside of the technology and everything that we're building now. We had first-mover advantage to be able to use our online presence to the benefit of our agents and their ability to lead generate, build their own brands, and create their own "SERHANT effect," as they call it, in a way that other firms probably are not going to realize as a true value add until it's too late.

Joe Cass   00:20:20

Great. Thanks, Ryan. Greg, in what parts of the globe is real estate really growing at present? And conversely, what parts of the world is real estate sector kind of slowing or maybe decline?

Gregg Lemos-Stein   00:20:31

Yes, it's a great question because we've been talking about the U.S. and the dynamics are very different in other areas of the globe. I'd say all real estate is affected by the precipitous rise in base interest rates. It is an interest rate-sensitive industry for sure. But the office dynamic we talked about is not quite as acute in other markets. And those of our listeners who are tuning in from, let's say, Hong Kong or other areas, they're like scratching their head at the three-day-a-week model because they're in the office a lot more. So office, I think, is comparatively less severe in other areas, and that's borne out in the valuation data we're having. The declines are much less, but it's a factor. But I think development has been under severe pressure in China, as many of our listeners know about, and many developers have defaulted or entered credit stress. Retail is still an issue. Maybe it's been around for us long enough that we realize that the e-commerce effect on retail is just sort of part of the fabric of what we do. We're not adjusting to that. Areas that it's growing—I'd be hard-pressed to say where real estate is going gangbusters. But of course, there are markets that are expanding. I'll just mention one. This is not comprehensive, but I'm aware that there is a lot of activity going on in the Gulf and particularly in Saudi Arabia, which is opening up and modernizing its markets. And Riyadh, as I understand it, is a bit of a boom town right now, with lots of ambitious development going on there. So that would be one I would point to.

Joe Cass   00:22:10

Great. Thanks, Gregg. Ryan, how has AI impacted the real estate industry thus far? And how are you hoping to utilize AI in your own business at SERHANT?

Ryan Serhant   00:22:23

Great question. There have been many paradigm shifts in the world, right? You had the printing press initially, which really democratized information, democratized knowledge. Before that, it was hard to get information around, hard to write, and hard to copy. The printing press helped that. There was the combustible engine, which didn’t look exciting at first because cattle or oxen could go up hills and around corners, while tractors couldn’t. But then people realized, oh, maybe we’ll just create farms that are flat and straight. And then this tractor never needs a nap, perfect. And so I think what we’re seeing now is much like the Internet—AI is creating a paradigm shift, and it’s incredibly exciting because it allows you to redefine the way that you work. As AI started to get more and more popular over the past couple of years, we at SERHANT, our development team, and our technical team really looked around and said, I think everyone is going to embrace AI the wrong way. Everyone is going to focus on wrapping large language models (LLMs) and creating chatbots and more screens, which ironically creates more work. And I think the whole goal of having AI and resources like ChatGPT is to help you redefine the way that you work and save significant time. So we’ve been far more focused on what we would call a large action model. Not focused on large language models like most of these new dot-AIs and dot-IOs, which are like the new dot-coms, where technology changes every single day and you’re constantly playing catch-up. Instead, we’re focused on what a large action model could look like. Whereas a large language model is focused on the next best token, we’re focused on the next best action. How do we scale human support to create not just another tool for us to use? We created something called 'SERHANT Simple,' which at its core revolutionizes the approach with AI by focusing on human support. It’s proprietary technology, yes, it utilizes AI, yes, but we have real humans, and we’re scaling their ability to support our customers faster and more precisely than ever before. Our agents are completely redefining the way they work without having to do more work to learn how to redefine their work, creating the most frictionless process. Right now, Simple is in beta in four states, and I looked at it on Friday—97% repeat usage. I’ve never had that in anything we’ve ever built before. It’s exciting to see the product-market fit because now all salespeople only have to focus on what they are uniquely qualified to do. They no longer have to do work that another person, system, or process could do for them. And they can also do it on the go—it’s completely mobile. That’s where we’re embracing AI and taking a counterintuitive approach.

Joe Cass   00:26:27

Great. Thanks, Ryan. Gregg, you've got oversight over a number of corporate sectors from pharma to autos and real estate, which you've mentioned already. What practical Gen AI or AI uses are companies sharing with us? And what benefits are they expecting to receive from the technology?

Gregg Lemos-Stein   00:26:45

Yes. Ryan's description of it as a paradigm shift is an act one. It's gigantic, and it cuts across so many different sectors. The impact is going to be massive in the way we work. It’s a little more difficult to ascertain the credit implications, but this is really our calling. What we have to stay focused on is whether it will create disruption in certain sectors, or augment the ability of other sectors to do what they do and be helpful, potentially credit positive. Time will tell. We've already had some rating actions, notably in the media space. But in terms of what companies are doing, broadly speaking, you could bucket it into improving customer service and interfaces with customers, but also cutting costs. These are not mutually exclusive, because if you're able to replace part or all of your call center with AI (which is not happening immediately—it will take time), that's a cost savings and potentially improves the way you reach your customers. But even though it's growing rapidly, you might also see some hype. Some sectors may say it will change things faster than it actually will. We’re cognizant of that. Some examples: in pharma, I understand that AI is a huge part of potentially shortening the research and development cycle for pharmaceutical companies, which is enormously expensive and increasingly time-consuming. Think about the implications for defense. We’ve already seen defense budgets increasing. And by the way, IT budgets—this seems like a secular change in spending on chips and software, reflected in some stock prices, which I won’t comment on in terms of rationality—that’s another big impact. The list goes on: utilities are benefiting too, with AI predicting potential weather events or wildfires. This is a huge boon to them in a growing area of concern to mitigate risk. I could go on and on, but we’re having many conversations with our analysts. We try to embed these ideas and directions in our forward-looking outlooks. We just published industry credit outlooks on every sector in corporates, and you’ll see a lot of mentions of Gen AI and regular AI throughout those reports.

Joe Cass   00:29:25

Ryan, we've spoken about the power of social media in building a business and also a brand. Have you got any stories about how social media has directly translated into revenue or just opportunities for you or your business?

Ryan Serhant   00:29:39

Sure. But before I forget, something that was just mentioned was so interesting to me. The paradigm shift is so real, but I look at companies that are embracing "AI" and those that are not, or those that are embracing the wrong part of "AI". They’re not embracing the paradigm shift because they’re too distracted by the technology. That’s a really key point to make. I liken it almost to the bird and the bug analogy. There’s a car racing down the highway, and a bird sees the car coming and can shift, right? It can fly higher, let’s say. But a bug can’t, because it can’t perceive that rate of change. Those are the firms that are embracing the paradigm shift and building on top of "AI". Then you have other firms that are distracted by the technology today. It might sound a bit aggressive, but I do see those firms as the bug. They’re still flying, everything is okay, until that car comes through and they hit the windshield. To go back to your question about social, we use "Simple", for example, to do immediate social audits for all of our agents and to create social calendars and content. "Simple will do anything for our agents." It’s wild to see it in action. So now we have agents who are creating video walkthrough tours, posting them across platforms, and selling properties sight unseen—properties worth $3 million, $7 million, $10 million. These deals aren’t transacted directly through DM; you still need attorneys, there’s still a lot of email. But that point of first substantive contact is happening through a different device or platform. It’s often not us creating the content to reach the consumer directly, but to reach their circle of trust, which sometimes is their kids. We created a property tour in the middle of COVID for a townhouse priced at $15 million at 357 West 17th Street. Real estate agents weren’t considered essential workers in New York City; we weren’t allowed to go outside. The Department of State was actually trying to get people in trouble for trying to still work and make a living, which is a whole separate conversation. But we created a property tour, and a thirteen-year-old girl saw it because she wasn’t in school and was on her phone all day. She showed it to her parents, and the parents bought it, sight unseen. So the deal was done—there were attorneys involved, it was a traditional transaction, not on the blockchain—but the customer was created, the market was created, the urgency was created, and the deal only existed through social.

Joe Cass   00:32:53

Fantastic. Thanks, Ryan. Ryan, we've got lots of viewers, lots of listeners interested in advancing their own career. what kind of tips would you offer to build a personal brand that maybe would open doors to, I don't know, a more fulfilling or exciting career opportunity in the future?

Ryan Serhant   00:33:17

Sure. I saw a statistic at the end of 2017, early 2018 from the U.S. Department of Labor that said just over 20% of U.S. taxpayers are also filing a 1099 tax return. Now, some of them are also filing W-2 tax returns and so on, but over 20% were filing a 1099. And the U.S. Department of Labor said by 2027, they expect that number to be over 50%, which means that over 50% of taxpayers, that’s just in this country, are going to be filing a 1099 in just a couple of years. That’s an interesting stat. And that means that those people are selling something. Maybe they’re selling their podcasting services, writing T-shirts online, real estate, cars, whatever they might be selling, whether they consider themselves salespeople or not. And the only way to build your career as a 1099 independent contractor in the United States who has to make a living for themselves every day or make residual side hustle income on weekends and evenings, etc., is to create awareness for either your products, brand, or your personal brand. And today, you can do that from your phone. You don’t have to have the right connection to get you into the right newspaper on the right television show or kind of know the who’s who. Social media has really kind of brought about the democratization of talent more than anything. And so, brand is broken down into a math equation, right? It starts with the core identity of the person or the product. That core identity translates into perception the world now has of that core identity, either in the digital space or in people-to-people interactions. That perception, then, when you leave the room or your product leaves the website, let’s say, turns into reputation. And then over time, that reputation becomes the brand. It’s what you’re known for. It’s what's clear, concise, and memorable. And you can build it by building a core identity. If you’re building a personal brand, you’re focused on your "and." So, I am real estate and media. That’s what I’m known for. That is my brand. I wish I could be real estate and I don’t know, fighter jets. That would be cool. But that wouldn’t really help me with it. So, real estate and media. I’m going to build my brand on that. Now, I’m going to make consistent content. That’s kind of Phase two. And I can do that through video. I can do that through static images. I can do that through LinkedIn. You can be a thought leader. You don’t have to dance on the Internet. I can do that through in-person events. Maybe you don’t have a smartphone, maybe social is not your thing. That’s totally fine. But maybe twice a month, you do an in-person networking event of some kind, and you’re building that way. And then lastly is amplification. The way I like to say it is really shouting from the mountain top because success begets success. And no one is going to know that you sell amazing T-shirts, or that you sell investment services, or that you sell real estate if you don’t tell them about it. And you can build that process now easier and clearer than ever before.

Joe Cass   00:36:44

Thanks, Ryan. Gregg, I do my research. I checked out on LinkedIn that you actually started your career as a reporter for associated press for nine years, which I didn't know. So interested to know what your experience was like and what kind of news or stories were you covering at the time?

Gregg Lemos-Stein   00:37:03

Excellent research, Joe. First off, I’ll say that I’ve only worked for three organizations since graduating college many, many years ago: The Associated Press, Mellon Bank (which is now part of Bank of New York), and now S&P for the last twenty-one years. All three organizations were founded somewhere between 1860 and 1880. So, what this will tell you is I’m a long way off from Ryan’s entrepreneurial spirit. I like stability. I like organizations that have been around for a long time and will be around for a long time to come. But that was an exciting and wonderful learning experience, those years as a reporter for the Associated Press. I spent the first few years covering sports, which is a dream job. It was crazy hours, working nights and weekends, which was also kind of a dream because, way back when, I was concerned about working normal hours or, more specifically, getting up early in the morning. I’m very, very different now. I’m an early riser. But I covered sports for a number of years. And then I covered business news, financial news, and I really credit that for being part of the transition to what I do today. I got to cover a lot of stock market stories, Wall Street stories, big mergers at the time, but we’re talking a while back. We’re talking about the 1990s. And I remember two stories in particular. There were shorter stories, but one was about Frito-Lay entering China for the first time, and the other one was about the first Russian company listing on the New York Stock Exchange. So, this is a very different time, right? Because this is sort of like the acceleration of globalization. And now we have a different context where there’s some evidence that that’s being rethought. But the -- I remember the first paragraph of the Frito-Lay story. They were launching Cheetos in China, but they had very, very different flavors. It was like cuttlefish and prawns or something. So, the first paragraph was, "A Cheeto isn’t a Cheeto in China." So, I remember that one. It was a short and succinct headline. And then the Russian stock market story is about a Russian wireless company, and it doubled on the IPO or something like that. It did a very successful IPO, and the lead paragraph was, "Even the Russians couldn’t bring a bear to Wall Street." So, we had a little bit of fun with those stories. You can groan all you want, but it was a great training ground, by the way, and it really resonates with Ryan’s comments about media and communication and nouns and verbs. This has applications no matter what you’re doing. It’s more applicable to credit ratings than you might think because being able to communicate your opinions is really vital to what we do, and doing so clearly and succinctly is really critical.

Joe Cass   00:40:02

Great. Thanks, Greg. Ryan, what opinion or view on real estate do you have that few others would agree with you on?

Ryan Serhant   00:40:14

I mean, topically right now, I think people are assuming that given the National Association of Realtors’ commission lawsuit settlement, buying a home is going to get less expensive and that real estate agents are going to become more and more obsolete. That is what most people think. Everyone has been forwarding me all the articles. I am obviously biased, but I also remember having to sell real estate door-to-door. And when the Internet really took over on real estate and websites like StreetEasy, Zillow, et cetera, came about, everyone said the same thing: "Salespeople are gone. Real estate is now going to be less expensive because you’re going to have the democratization of information. People can see comparable sales now. You pesky salespeople aren’t going to be able to drive up pricing anymore." And that didn’t happen either, right? The same way certain financial websites didn’t take down certain investment banks. The banks only got stronger. And so, I am very much of the mind that there will be greater transparency now with fees and commissions. The way we’ve always operated with our firm and in New York City, which is very, very different from the rest of the country, commissions are always transparent. They had to be. But now I think nationally, I think the old guard, which is the National Association of Realtors and these big brokerages, are in for either a world of change or a world of hurt. I think the rules are changing. I think there are new rules. And I think what we’re going to experience now is an evolution — just like I was talking about with AI and the farmers and the tractors, right? They didn’t throw out the tractors. They just created different farms and a different way to farm. And so, I don’t think that what we’re going to experience now is going to get rid of real estate agents. I think it’s going to separate the agents from the brokerages who are not open to change because what got you here won’t get you there. I think old rules pave the way for new rules. And I think that as interest rates stabilize or continue to come down, pricing is only going to go up, and consumers are still going to want great representation, buy side or sell side, because you don’t know what’s real anymore when you log in online. So that’s, I think, a unique opinion of my own.

Gregg Lemos-Stein   00:42:58

I'll confess, Ryan, that I thought that until about 7.5 minutes ago when you started talking about it. It's more complicated that commissions actually may go up in some cases. So...

Ryan Serhant   00:43:07

Listen, listen. So, I know we all have to jump here, but in New York City and in most of the United States, total compensation for real estate agents — because there’s typically two agents on the deal, sell side and buy side — is between 5% and 6%, right? It’s the way it’s always been. Very rare is it much lower than that; very rare is it much, much higher than that. And I see a lot of, "Oh, well, this is the highest commissions ever. The rest of the world is this. The rest of the world is that." Well, I’ve been around the rest of the world, and I’ve sold property around the rest of the world. And what I’ll tell you is that is not true. You have markets where you have salaried salespeople who are not incentivized to get the highest price for their seller or to get the best deal for their buyer because there is no incentive. And so what ends up happening is a lot trades off-market, which is not in the best interest of the consumer. And then you have other markets where you have a mixture of on- and off-market property. And so you could work with an agent, and they’ll tell you, “Hey, so I have a fixed fee for anything that’s on market. But anything you’re going to want to buy is actually off-market, and my fee is 10%.” So, I don’t know what everyone thinks we’re going to. But if going back to the Wild, Wild West is what everybody else wanted and what they wanted to bring about through these lawsuits, I mean, I don’t know what to say.

Joe Cass   00:44:36

Okay. Great. And lastly, just before we go, Ryan, do you want to share any kind of upcoming project goals, ambitions that you're looking to do either kind of this year or next year?

Ryan Serhant   00:44:50

I'm incredibly excited for "SERHANT Simple" as we continue to roll it out to our agents. Right now, it is just within SERHANT at our own brokerage. Because what makes it so exciting is that it's a full stack platform. So we have agents who use it who never want to touch e-mail again. They don't have to now. We have agents who use it who just want to create marketing plans for a year, and they don't have to do that anywhere else. So I'm really excited to see that take off and continue to improving the lives while also saving significant amounts of time for our salespeople.

Joe Cass   00:45:29

Perfect. Well, thank you so much to Ryan. Thank you to Gregg for your time today. For everyone watching and listening, see you next time in fixed income at 15.