Warren Buffett’s Berkshire Is Now America’s Second Largest Real-Estate Broker
Berkshire Hathaway, often largely invisible, has an increasingly visible brand name as its real-estate business expands
The Omaha conglomerate was the nation’s second-largest residential real-estate brokerage last year, making Berkshire Hathaway a presence on neighborhood yard signs from Los Angeles to New York. It has franchised the Berkshire Hathaway HomeServices name to 1,330 offices and more than 45,000 agents.
Mr. Buffett, Berkshire’s chairman and chief executive, wants his franchise brokerage business, HomeServices of America, to get even bigger—and the sterling Berkshire Hathaway brand is an asset. But further expansion could also bring more visibility and risk for the Berkshire brand. Historically, its biggest consumer-facing companies—brands like Geico, Dairy Queen and Fruit of the Loom—haven’t used the parent company’s name.
“When you get a disgruntled customer, it might go straight up to Warren,” said Gino Blefari, chief executive of Berkshire Hathaway HomeServices.
This weekend, the real-estate business will be among dozens of Berkshire brands on display at the company’s annual meeting. Some 40,000 shareholders from around the world are expected to gather in Omaha, Neb., to hear Mr. Buffett and Berkshire Vice Chairman Charles Munger discuss the business and answer questions.
Berkshire’s real-estate business earned $220 million last year, down from $225 million the year before due to higher expenses, according to the company’s annual report. Its revenues grew by 23%, to $3.5 billion.
“We are certainly not the biggest” Berkshire business, said Ron Peltier, chief executive of HomeServices. Some of Berkshire’s largest businesses reported tens of billions of dollars in 2017 revenue. “But we are one that interacts and touches lots of consumers …in the most significant financial transaction of their life.”
HomeServices was the second-largest U.S. real-estate broker last year by number of transactions, according to Real Trends, a trade publication. HomeServices now owns 42 brokerage brands around the country and also provides financing, title insurance and home insurance services. Many of these brokerages still use their own names.
“I hear a lot of talk in the marketplace now about money that’s been raised in the residential real-estate arena, but it’s still only a fraction of what Berkshire Hathaway and HomeServices have committed,” said Jeff Detwiler, chief executive of Long & Foster Cos. in Chantilly, Va., which was purchased by HomeServices last year.
The Berkshire name was the key reason that Berkshire Hathaway HomeServices Hodnett Cooper Real Estate in St. Simons Island, Ga., joined the franchise network a year ago, owner Pat Hodnett Cooper said.
“Everybody knows who Warren Buffett is,” she said. “When I go to get a luxury listing, it is 10 times easier for me now than it was a year ago.”