Pod Insights The Prof G Pod with Scott Galloway Office Hours: The Future of Real Estate Commissions, Why Americans Abroad Need to Vote, and How to Be a Good Son About this episode Scott gives his thoughts on the new rules for real estate commissions, set upon by a landmark legal settlement. He then discusses the importance of voting, specifically how he thinks our elections would be affected if more Americans living abroad sent in their ballots. He wraps up with a conversation on how to be a good son.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:27 Scott Galloway? Welcome to the Prop G Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to [email protected] . Again, that's [email protected] . First question.
1:44 Speaker 02 Hi Scott, this is Max in Washington DC. I love all of your shows. I'm a Realtor, so I spend many hours in the car, and your voice is the soundtrack to my life. Anyway, I know you're a lover of real estate and you own great properties. You spoke about this topic a few months ago when the news broke, but as things evolve, what do you think of the recent class action lawsuits and settlements regarding agency or real estate brokerage commissions? I've been a Realtor for 24 years and the industry has pretty much stayed on rails in terms of the negotiated commission rates. I'm just interested to know your personal thoughts.
2:16 Scott Galloway? Max from Washington DC. Thanks for the question. I love real estate. So first off, real estate from an investor's standpoint is the most tax advantaged asset class in America. The decision you're talking about, the decision you're talking about, the National Association of Realtors, which represents over 1 million Realtors, decided to get rid of longstanding policies on agent commissions in response to lawsuits. They didn't really decide to do this. They were forced to do this in response to lawsuits that argued these guidelines resulted in elevated costs for selling homes. As part of the settlement, the National Association of Realtors, or NAR, will pay $418 million to compensate US home sellers and implement a new set of rules, including stopping the practice of listing agents' fees on multiple listing services, which encourage the sale of pricier
3:01 Scott Galloway? homes. They're also removing the obligation for brokers to join these listing services. Plus, buyer's agents will be required to have written agreements with their clients. These changes, effective in July, aim to enable more negotiation on agent commissions, potentially lowering costs for buyers and sellers. Experts believe this could encourage price competition and that some buyers might even forego using agents. So this is a big deal. I think real estate is probably the second largest asset class in America, just behind, I think, behind the credit markets. And typically, the buyer and seller split a commission of 6%, a rate that is actually higher than most other countries. It's 4.5% in Germany, 2.5% in Australia, and only 1.3% in Britain. With this change, the 6%
3:43 Scott Galloway? commission is no longer a thing. Americans, get this, currently shell out around $100 billion annually on commissions, according to Steve Brobeck, the former head of the Consumer Federation of America. This amount is expected to drop by somewhere between $20 billion and $50 billion. Why is this happening now? Last year, the NAR and other brokerages faced lawsuits for allegedly conspiring to make sellers pay the buyer's agent commissions, violating antitrust laws. A Missouri jury ordered $1.8 billion in damages, potentially rising to over $5 billion, trebling the damages. Was this the turning point? Yeah. This verdict resulted in the filing of over a dozen other lawsuits. So what's going on here? Essentially, the effect is the MLS is you have to have your home, if
4:24 Scott Galloway? you're selling your home, on the MLS to get visibility to potential buyers. And in between the buyer... And the seller are these agents and the agents aren't interested in showing your home unless you agree on the MLS to pay the buyer's broker to an half percent. And so the buyer is under the impression they're not paying anything. Of course they are. If they have to pay a five or six percent higher price, because five or six percent is lost on day one, then of course they're paying a higher price. But they have figured out a mob-like, cartel-like control of the pricing system. And what this is saying is this is bullshit. These folks should have to engage in the same economy we all engage in, and that is competition. If you're an outstanding broker that really understands the market, that has a ton of
5:08 Scott Galloway? contacts, that knows how to position a property, you will be able to negotiate an hourly fee, a commission, you'll be able to make a living, rather than just the standard fee for everyone that is like this monopoly cartel mob-like pricing scheme. And it's attracted too much human capital. Over 50% of real estate agents last year either sold zero or one house. The bottom line is just too many people in it. And it should be competition. The best brokers should make a lot of money and the mediocre brokers should go away. And also, people who have a huge amount of their wealth tied up in this one asset should be able to negotiate the fees. And it should be whoever offers the best service as a broker for the lowest price, like every other market, wins the business.
5:51 Scott Galloway? This has been a pure, a pure case of price fixing. So I think this is a good thing. I think it'll bring down prices. I think it'll right-size the industry of realtors. I think it's going to save, according to these folks, people with assets $50 billion a year in commission and hopefully, hopefully make prices or the cost of housing a little bit more reasonable, I think, which would especially benefit the new entrants. In sum, this is the right move. It's capitalism, it's competition. Question number two.
6:22 Speaker 03 Hi Scott, it's Sarah Kempner. I interviewed you for US.Vote about the voting gap for Americans who are abroad. It's horrible, they don't vote. We discussed the reasons they don't turn out and how readily they could access ballots, but we didn't discuss what would happen if most of the 3 million-ish overseas Americans who could vote, did vote. How do you think this voting block would affect American economic policy and our global position? I'd love to hear your perspective on this.
6:58 Scott Galloway? That's a thoughtful question, and the honest answer is I don't know. I do remember the interview, and I'm glad you brought it up because it's important, I think, to engaging in, I don't know, you know, voting. Voting makes me feel masculine. I feel like I'm serving. I feel like I'm, I don't know, being a good citizen, and I'm, I don't know, I'm expressing my views, I'm taking a vested interest, I'm planting trees, the shade of which I will not sit under. I think voting is such an awesome thing. Not, I don't know, that probably sounds sort of sexist, but it makes me feel strong, strong like Bo. I go to my voting booth, I don't know what accent I'm trying to put on there. So I think what you're doing is a great idea, and it is easier than you think.
7:41 Scott Galloway? If you go, I'm a resident of Florida, there's a site you go to and you sign up or you get information, they send you an absentee ballot. According to the Federal Voting Assistance Program, or FVAP, nearly 3 million Americans living abroad have the right to vote absentee. Data from FVAP shows that only 3.4% of eligible Americans abroad who are eligible to vote participated in the 2022 midterm elections. So there's always a lower turnout in midterms, but 3.4%. Americans living in the US were 18 times more likely to vote than those living overseas. The FVAP estimates that 7.8% of non-military citizens living overseas participated in the 2020 general election. This is much lower than the overall turnout rate of 67%. Think about that.
8:24 Scott Galloway? Active-duty military had a much higher voter participation rate of 47%. Doesn't make sense, people who invest the most in our country are the most patriotic and decide to vote. So why is voter turnout so low? About 1 out of 5 overseas citizens report that the mailing system in their country is somewhat or very unreliable. The idea, I guess, of trying to mail in Your ballot from, I don't want to name a country because I'll sound, I don't know, it'll be considered a hate crime. But I guess the complexity of not being able to go to your voting booth, or I bet a lot of this perception, I bet it would get there. I don't know if it's more expensive. Who are US overseas voters? Maybe that'll give us some insight. Americans abroad are spread out across 186 countries, but mostly reside in Canada and the UK and have moved for family and employment reasons.
9:09 Scott Galloway? Huh? Raise my hand on that one. A good majority of Americans abroad are either in the military or part of a military family. Around 1.3 million active duty US service members are stationed outside the country. Three quarters of these individuals are eligible to vote. So I gotta be blunt. The reason I did this interview with you and the reason why I'm engaged is I would really like to see President Biden reelected, or specifically, I would really like to see President Trump not reelected. And it just strikes me that it's likely that people abroad have college educations or good jobs, otherwise they couldn't afford to move abroad. And both of those things are correlated with blue. What do I mean by that?
9:53 Scott Galloway? College grads tend to lean blue, higher income people, it's flipped. They used to lean Republican, now they lean Democratic. And my thesis is correct. So about 32% of people in the United States have a bachelor's degree, whereas people living overseas, it's about two thirds of them, it's about 66%. They tend to be younger, they tend to be working age, and also they tend to be more male, which leans, I guess, a little bit more conservative. But my view was that if we can get more people, more expats to vote, that that will help reelect President Biden. And that's why I did, I did the interview. Also, I just think it's important that Americans abroad feel some connected tissue back to
10:37 Scott Galloway? their, back to their homeland. It's super important. This is an important election. Come on, come home. If you can't come home to America, just visit us via the mail and vote. So let's abuse those voting polls together and let's get fucked up. Let's get high on voting, even if it's abroad. Have a little taste, a little, a little scotch at that drug called American patriotism. Send in your ballot, it's easier than you think. Vote from overseas. Let's, let's party together. Thanks for the question. We have one quick break before our final question. Stay with us.
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14:38 Scott Galloway? Welcome back. Question number three.
14:40 Speaker 04 Hey, Prof G. My name is Owen from Quebec City, Canada. First off, congratulations on your success with the podcast and your new book. I'm an avid listener and especially enjoy your thoughts on masculinity and your experience as a father, as I plan to start building my own family within the next few years. My question for you is about being a good son. I have a good relationship with my father, but I'm always looking to strengthen our bond and make the most of the precious time we both have while we are healthy. As both a son and a father yourself, what do you wish you had done differently or are currently trying to do differently with your own father? What is your advice for continuing to build a father-son relationship as your sons become adults? And what have you learned from your experience as being a son yourself? Thanks so much.
15:22 Scott Galloway? Yeah, we're gonna need a bigger boat, or I would say we're gonna need a bigger couch. It sounds like you're just on your way. The fact you've been asking that question, the fact that you're even focused on, you sound like a young man on the relationship you're gonna have with your kids and the relationship trying to be a better son, it probably means you're already a great son, just the fact you've been thinking that way. I like a lot of people have a complicated relationship with my father, although it's gotten simpler as I've gotten older and I've matured. My parents split up when I was eight. And I think that you have a tendency, when there's a divorce, by virtue of that, you're eight years old and these two people decide they don't like each other, which implies to an eight-year-old that there's a wrong and then there's a right, that one of them is wrong and one of them is right.
16:07 Scott Galloway? And when you're living with your mom and you see how hard it is for her, you see the emotional trauma she's going through. I resented the fact that the moment they split up, it appeared like my dad in his new family had a really nice life. In his old family, I see above my mom and me, just didn't have as nice a life. And the fact that he kind of immediately took off for Ohio, despite the fact I was living in Southern California with my mother, I think I, deep down, just felt like he abandoned me. And I've always held a little bit of resentment for my father. And some of it is unfair because I kind of decided that my mom was a saint, my dad was a bad person. I think it's very natural for a young man who feels protective around their mother, and probably very true of daughters, too.
16:52 Scott Galloway? I have slowly but surely, over the course of my life, moved away from what I call is the scorecard. And that is, my dad wasn't that good to me, so I'm not going to be a very good son. Well, first off, that's not true. My dad wasn't bad to me. He made an effort, he showed up, he would travel to Chicago, fly me to Chicago, take me to museums. When he came to town, tried to figure out what I wanted to do. You know, bought me a pair of cowboy boots because he saw me looking in a window and admiring cowboy boots. So he went, you know, he took me and bought me a nice pair of cowboy boots because he thought it made me... You know, he showed up, he did shit. He showed up to my Little League games. Was he there nearly as much? Was he there a fraction as much as my mom? No, but he tried. He did show up and he tried.
17:36 Scott Galloway? And this is how my relationship with my father and my relationships in general have gotten much better. I have ripped up the fucking scorecard. Is this person being as good a friend to me? Are they showing me as much generosity as I'm showing them? And that is a guaranteed way to be unhappy and have a failed relationship. Why? You will instinctively inflate your own contribution and unwittingly minimize theirs. And here's what you need to do. Decide what kind of son, decide what kind of father, decide what kind of spouse, niece, aunt, uncle, friend, entrepreneur, decide what kind of son you want to be. And just be that son.
18:17 Scott Galloway? I started being a generous, loving son and not measuring it against my perception of what my dad did or did not get right, or his relationship with his second wife, my mom. And we have a nice relationship now. In terms of things you can do, I can tell you as a dad, what you want is you just want time. You just want time. I got sold out of bill of goods around fucking boarding school for my oldest and I got talked into it. He'll be home on the weekends. It's great for him. And it is, it's great for him. And that's the key. He loves it. He's socializing. He wakes up, puts on a suit, goes and plays cricket. It's an amazing educational institute. It's just been great for him. It has been, it has been one of the worst things that has happened to me.
19:02 Scott Galloway? I come home and my boy's not there and it's just fucking heartbreaking. And he didn't have to, he doesn't have to be with me, doesn't have to be around me. I just liked knowing he was upstairs. I loved hearing his voice every once in a while where he was on the phone or I loved hearing him laugh. And I'd go upstairs, check in with him, talk to him five minutes, come in, say goodnight to him. I didn't real, I was not ready for that to leave. So what does your dad want? Your dad literally just wants time with you. A trick I do now, because I can't be with my dad physically and because he's having a difficult time on the phone, I send him videos. I just record a video. I'll just literally be on the couch, say this is the dogs, I'm hanging out, I'm watching this show. And also, to the extent you can, or, or you're comfortable, err on the side of asking your dad for help and advice. That's what we want.
19:47 Scott Galloway? We want to know that our kids, that we can nurture them, that we can help them. I would kill for my kids, and they do, but I wish they asked me more for advice and help. That's all we want. We want to be your dad. That's all for this episode. Again, if you'd like to submit a question, please email a voice recording to [email protected] . Again, that's [email protected] .
20:19 Scott Galloway? This episode was produced by Caroline Shager. Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy No Malice, as read by George Hahn, and on Monday with our weekly market show.
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