Charlotte Simonelli: Yes, we’re not going to disclose that. But I can tell you, there will be a little bit of a tailwind next year. I wouldn’t — there was obviously we started taking these expenses in Q3 of last year. So, it’s kind of like phased out over two years. So, you’re not going to see like a one-time huge benefit because apartment of it hits this year and part of it will hit next year. We’re just really pleased that we’re done with it, and we can experience the tailwinds from having lower litigation expenses. So —
Ryan Schneider: And John, this is one of the factors that went into the settlement decision was just the ongoing expense of this kind of complex and prolonged litigation. And so will have th1e tailwind that Charlotte talked about. But I think ever getting into the nitty-gritty of how much we’re spending on a specific matter and things like that is a bridge too far. But we’ve tried to be transparent about when we’re taking big reserves, which we did like three quarters in a row in all top up this quarter. And then that will kind of roll off on a last 12-month basis in terms of our reporting that you see, but we’re going to lower litigation expenses — that’s what we’re going to have subject to these things all being approved.
John Campbell: Okay. That’s helpful. And then just to clarify, you guys were not adding that back to your adjusted EBITDA?
Charlotte Simonelli: No, we did not exclude it.
Ryan Schneider: No. I mean look, it’s funny to say that because there are people who say, hey, you should have always added back all this legal stuff to your EBITDA, but that’s historically not been our approach. So we didn’t change it, but we have tried to be clear that the numbers we report would have been bigger, obviously, if we had not done some of the legal reserving and everything else. But it served us well. And we think you’ve got a good — the fact that our business has more octane than some of the numbers we printed…
Charlotte Simonelli: Including this quarter.
Ryan Schneider: Including this quarter is a good thing.
John Campbell: Absolutely. Last question on the price side of things. I mean that was a lot higher than we expected this quarter. I think also probably a lot of investors were expecting as well. Ryan, you mentioned that 80% of the markets are experiencing price gain. So it does seem like it’s fairly broad-based. I’m curious about your take on home price gains as you approach the new year? And if you feel like there’s enough momentum or if that can continue in the next year. It just seems like there’s a lot of moving parts there, where if we get the inventory, maybe the price cools off. So, I know there’s a lot of moving parts, but just your best guess.
Ryan Schneider: Yes. Look, I mean we tend to not model a lot of price gains, right? Like because we’d rather have the gains on the given side. So we’re actually rooting for what you just said, which is let’s have the unit world unlock, let’s get some more transactions there. And then we’re happy with whatever happens kind of on the price side. So we’re — the price numbers, I think, in the quarter probably were a little bit higher than we thought they would be. But when you put the even higher mortgage ratings and then what that does on the supply side and then the fact that there is still demand out there, we’re not that surprised by it, right? But there’s a few markets where price did drop, but not some of the bigger markets.
But when you see markets up 2% or 3% in price or other 5%, 6%, 10%, it’s really, I think, the fact of the rate supply/demand thing. And so, we’re going to — when we model next year, and we’ll probably talk about this on the next call, like Charlotte talked about on the cost side, I think you’ll see us like not — we’re not — we don’t want to bet on price, right? And we also think the market is healthier with as many units as possible no matter what happens to it. So, that’s what we’ll be rooting for, but we’re going to use all this trend data to be clear eyed about it that — that’s just a little more color on kind of how we think about it.
John Campbell: Yes, that’s very helpful. I appreciate all that. Thanks, Ryan.
Ryan Schneider: Thanks, John.
Operator: The next question is from Tommy McJoynt with KBW. Your line is open.
Tommy McJoynt: Hey, good morning guys. Thanks for taking my question. The first one is, could you help me frame what the average commission split of maybe, say, the top 20% versus the bottom 50% of agencies? Just really kind of thinking of how big that difference is? Basically I just want to know if is it a small difference where the top agents get maybe 85% on average and the bottom get 75%, or is the gap a lot wider than that?
Ryan Schneider: I mean, it’s probably more in your first kind of bucket, to be honest. I mean it’s real — I mean, we have 50,000 agents in our own brokerage, right? And it’s all — the range can be quite wide and depend on how many years we contract for and all these other kind of things. But assuming that the top agents have a — above our average split and assuming that the second and third quartile ones have below, that’s a pretty good assumption. And it’s kind of how the ecosystem works. And I think most of our competitors would probably have something similar with everybody being at different price points, obviously.
Tommy McJoynt: Okay. That makes sense. And then my second question, given you’re presumably pretty constant communication with your agents and franchisees with boots on the ground, given the ongoing class action litigation, seemingly getting a bit more mainstream news attention. Have you heard anecdotally from those agents that more buyers and even perhaps more sellers are starting to ask more about commissions perhaps negotiate a bit more or maybe seek out more rebates, anything like that?
Ryan Schneider: Well, a couple of things. So I always got a JetBlue in Atlanta, we had thousands of agents and franchisees there for the Coldwell Banker brand. Awesome week really at a good time. And I was just — I got tons of FaceTime with agents and franchisees. I guess, I would say a couple of things. One is like these agents are in the middle of commission negotiations with their sellers all the time, right? And like so that’s not a new thing. And we were — I was meeting with an agent from Florida. She and I were talking about just some of the negotiating tactics that some of the competitors down there were using versus her approach and all those kind of things and how you think about price and value in these discussions kind of thing.
And so like negotiating with sellers is not a new thing, and there’s a lot of that going on out there. So that’s not a lot on a question about that. No one is kind of telling me that they’re hearing something different from buyers or something like that. And so I think, again, I think the class action stuff is more mainstream in the real estate press than the general press. Like, we like the value both the seller and buyer just provide, and we think that we’re lucky to have settled the litigation. And remember, we settled the litigation and it covers our franchisees and it covers our agents. And so — that was actually the starting point of a lot of this conversation, which is kind of thank you and remind me how uncovered and why kind of thing.
But the discussion about customers’ negotiation was not any different than the Sotheby’s International Realty conference I went to in April kind of right? So — because that’s a big part of the ecosystem already today, and I think some people don’t realize that as much as they should out there in the world.
Tommy McJoynt: Got it. Thanks. And then just my last question is looking at over the next couple of quarters, given the existing cash balance, typically the fourth quarter and the first quarter are slower seasonal quarters, and we’re obviously, facing a low home sale market already. Can you talk about the kind of trajectory of your kind of cash balance and how you guys might need to kind of tap into your available revolver credit facility to the extent that’s needed?
