HomeServices of America, the real estate brokerage and services company owned by Warren Buffett’s Berkshire Hathaway, has snapped up one of its parent company’s own franchisees, Berkshire Hathaway HomeServices Florida Realty, expanding its Florida footprint by 1,750 agents and 40 offices.
The transaction continues HomeServices of America’s years-long acquisition spree, putting it even closer to overtaking NRT, the brokerage company owned by Realogy, as the largest brokerage firm in the country by sales volume. It also serves as a reminder that Compass, the venture-backed brokerage that grew from 2,000 agents to around 8,000 last year, isn’t the only brokerage vacuuming up smaller firms across the country.
Like Realogy, HomeServices of America owns and operates both a real estate brokerage and franchise networks, as well as mortgage, title, escrow, and insurance services.
The largest of HomeServices’ franchise networks is Berkshire Hathaway HomeServices.
So HomeServices of America’s acquisition of Berkshire Hathaway HomeServices Florida Realty represents a conversion of sorts: it transforms an affiliate of HomeServices’ largest franchise network (Berkshire Hathaway HomeServices) into an operation owned outright by HomeServices’s brokerage.
Rei Mesa, CEO of Berkshire Hathaway HomeServices Florida Realty, and his existing leadership team will continue to manage the firm, which is one of the top five brokerage firms in Florida and will rank as one of the largest brokerages within the Berkshire Hathaway HomeServices affiliate network.
“Becoming a member of the HomeServices’ family of companies gives us a unique opportunity to grow and better serve our customers, sales professionals, and employees,” Mesa said in a statement.
The acquisition further expands HomeServices’ Florida footprint, which includes Miami-based EWM Realty International and Jacksonville-based Berkshire Hathaway HomeServices Florida Network Realty. HomeServices bought the two firms in 2003 and 2016, respectively.
With the acquisition, HomeServices can now lay claim to nearly 45,000 real estate professionals and 925 offices across 30 states. The company’s associates facilitated more than 350,000 transactions in 2018, according to HomeServices of America.
Though perhaps overshadowed by the rapid growth of Compass, the tech-focused, venture-capital funded brokerage, HomeServices may have easily matched or exceeded Compass’ own expansion efforts in the last couple years.
HomeServices’ brokerage arm generated $1.122 billion in revenue in the third quarter of 2018.
That comprised the vast majority of total revenue booked by HomeServices of America as a whole, which also operates franchise networks, including Berkshire Hathaway HomeServices, as well as mortgage, title and escrow services. Due mostly to brokerage acquisitions, HomeServices’ total 2018 third quarter revenue leaped by 27 percent to $1.218 billion from $961 million during the same period the year before.
This massive growth has put HomeServices’ brokerage wing on the verge of leapfrogging NRT, Realogy’s brokerage arm, to become the largest U.S. brokerage. NRT generated $1.268 billion in the third quarter, virtually flat compared to the third quarter of 2017.
HomeServices as a whole — not just its brokerage arm, but also its franchise networks (e.g. Berkshire Hathaway HomeServices), title, mortgage and other real estate services — remains further behind Realogy on a revenue basis.
Compared to HomeServices’ revenue of $1.218 billion, Realogy booked revenue of $1.676 billion in the third quarter, based on cash from, not just from its brokerage arm (NRT), but also its franchise networks, which include Coldwell Banker, Century 21, ERA, and other real estate services.
Warren Buffett indicated last year that HomeServices didn’t plan on tapping the breaks in the near future.
“Despite its recent acquisitions, HomeServices is on track to do only about 3 percent of the country’s home brokerage business in 2018. That leaves 97 percent to go,” Buffet wrote. “Given sensible prices, we will keep adding brokers in this most fundamental of businesses.”