A – Ryan Schneider: Yes. So look, yes — great question. A couple of things. So, absolutely. We’re definitely seeing agents leave the industry. It’s typically the low or no productivity agents. And when you can see our agent count, you’ll see it actually go down a bit, in part because there are some of those people leaving the industry. And sometimes we’re kind of helping show them out the door a little bit because they’re not free to support. And if they’re not really going to be producers, then it’s probably not good for them or for us. And look, this is not a new phenomenon. When COVID hit a lot of agents left in Q2 of 2020 because Q2 is also at a time when a lot of people had to pay their state — real estate fees and things like that.
And so the trend of the top 20% of agents doing 80% or 90% of the business is not a new one, but it is continuing. And so we always look at things on kind of who’s producing and our retention on our producing agents is phenomenally good. We’re able to do the better recruiting that I talked about of producing agents that we’re not talking about low or no producers in those when we talk about those kind of numbers. But you are right that there’s definitely some movement out of the industry, but it’s really not concentrated in people doing a lot of business. And that’s not a bad thing. But it’s cyclical, right? The market gets hot, I think agent count will go back up as more people enter the industry. And we awfully take a lot of new agents and make them really successful and partner with them, and we are for that but we are in that shrinkage time as an industry right now.
Anika Dholakia: Great. Thank you. I’ll pass it on.
Operator: The next question is Anthony Paolone with JPMorgan. Your line is open.
Anthony Paolone: Thanks. Good morning. I guess first one, just on splits. How much of just the moderating growth in the splits is from I guess, mix? I’m trying to just understand that if like California rebounds and you get back to a more normalized distribution of activity around the country, like what the splits look like?
A – Charlotte Simonelli: Yes. So the geography doesn’t normally play a big role. It actually did play a little bit of a role in the quarter. It was less than 10 basis points. So I wouldn’t say it’s the most material impact. There was another impact I didn’t call out from some timing on our new development business as well. So if you kind of back out the noncore split movements, it would have been sort of less than half or about half of what I reported of an increase. So geography was an impact this quarter. It doesn’t — I don’t normally call it out because it isn’t normally it was, but I would say it was still relatively minor.
Anthony Paolone: Okay. But your sense is that like on a go-forward basis if a lot of these bigger regions kind of normalized, we shouldn’t expect like, I don’t know, 100, 200 basis point pickup or something like it’s not like that.
A – Charlotte Simonelli: Keep in mind, like right now, we have counterbalancing things between California and New York. Florida remains one of the stronger markets, and Florida is also one of the higher split markets, too. So it’s interesting how California and New York tend to kind of counterbalance each other for the long haul in the most part.
Anthony Paolone: Okay. Got it. And then Ryan, you talked about just demographics and positive things looking forward. I mean, what’s your sense for what for lack of a better term, a clearing rate might be for interest rates, or at what point are these higher interest rates socialized enough that you start to see people just act. I mean is there a number in your mind or some level that you think would prompt like a balance of activity?
Ryan Schneider: Yes, there is, and you may not like it, but I’ll just give it to you because I tell you the truth. Look, I think it’s 5.5% to 6% for mortgage rates, and we’re a bit away from that right now. But the evidence for me there is all the homebuilders who moved a lot of products but they did it by buying home rates down to 5.5% basically. I mean I talked to homebuilders in the past in a couple of months and they’ll buy down to 4.99% for homes to be delivered in the first 60 days and then they buy down to 5.5% for other stuff. Now, that’s changed recently, right? In the last month or so, now they’ve been hit because at 8% mortgage rates, I think their ability to buy down that far is crimped. I can’t really speak for them, but that’s what I see from the outside.
But there’ll be a little bit of relief as some of the people who have our mortgages kind of roll off over time, but I think that’s going to be pretty slow in a world where 80% of Americans have a rate below 5%. But I think if you look at consumer survey data, I’ve seen some good data from John Burns consulting on that and then you look at what homebuilders are doing, between 5.5% and 6%, people are willing to give up the mortgage they’ve got for a better different house. It does move product with new homes and so that’s the level that I think kind of unlocks the inventory problem because, again, prices are up in 80% of our portfolio. I mean, even with all the affordability issues of high mortgage rates, the demand is still greater than supply.
If we had more homes, we could sell them. More than 50% of our homes in like Global banker are selling within 14 days. I mean — so I think it’s going to take a mortgage rate in that ZIP code to unlock things.
Anthony Paolone: Okay. Thank you. And then just maybe last one for me. There’s a lot of just chatter and articles about DOJ risk in the industry, maybe for non-lawyers or non-experts on how that works? Like what can you tell us about that risk or where that might be? Just anything to level set there would be great.
Ryan Schneider: Look, I mean, we watch all the risks, but you’re going to have to go ask the DOJ about that. I don’t — I haven’t spoken to the DOJ and they’ve got their thing going with [indiscernible], but that’s for those guys to talk about.
Anthony Paolone: Okay. Thanks for the color.
Ryan Schneider: Thank you, Tony.
Operator: The next question is from John Campbell with Stephens. Your line is open.
John Campbell: Hey guys. Good morning. Thanks for taking our questions. With the settlement now in the works, Ryan, I’m hoping — or maybe Charlotte, hoping you guys could provide the all-in legal spend kind of tied to these suits maybe since inception or maybe just kind of what you spent year-to-date? Just trying to get a sense for what that profit lift might look like from the lower legal spend?
