As I’m sure you’ve realized, Berkshire Hathaway is in the process of picking up a real estate franchise from Real Living and Prudential. They also intend to launch an entirely new brokerage brand with those real estate agents.
On October 30, we learned that Berkshire Hathaway intends to acquire Prudential’s real estate agent network. They are obtaining it from Brookfield Asset Management.
During 2013, Berkshire Hathaway and Brookfield intend to create Berkshire Hathaway HomeServices. Once created, they will begin transferring the real estate agents over to this newly established firm.
Warren Buffett is excited to lend the Berkshire Hathaway name, plus their incredible financial strength, to the soon to be formed company. They are going to base it out of Irvine, California. A team of Prudential Real Estate executives will lead it.
“I am confident that these partners will deliver value to the residential real estate industry, and I am pleased to have Berkshire Hathaway be a part of the new brand,” said Warren Buffett in a recent statement.
The financial terms of this transaction were not disclosed, but the majority owner of this business is going to be the HomeServices of America unit that’s part of the Berkshire Hathaway conglomerate. As of today, the company has 16,000 real estate agents spread across 21 states. This will certainly help expand on the ever-growing number.
Ron Peltier, chairman and CEO of HomeServices, said the new deal will expand their national franchise network by adding an additional 75,000 agents. He also believes that this addition will complement the already existing local brokerages.
During an interview, Peltier tells us that it was more convenient to acquire a national franchise. In order to build one on his own, it would have taken many years and it would also be very expensive. They intend to completely eliminate the Prudential and Real Living brands over the next few years.
“The strategy going forward is to migrate the franchises over to one super brand: Berkshire Hathaway HomeServices,” said Peltier. This will give them the opportunity to create one main brand, which is beneficial to its online presence, and they prefer to do it under the Berkshire Hathaway HomeServices banner.
Peltier tells us that the existing brokers under the HomeServices banner are not going to be forced to switch affiliations to the new network. But they are going to be required to mention that Berkshire Hathaway owns them. As an example, Omaha-based CBS Home Real Estate can certainly keep its name. But all of their branded products have to also represent that they are an affiliate of Berkshire Hathaway.
Peltier tells us that it’s important to mention Berkshire Hathaway because he wants all of these companies to be able to show up correctly when potential customers look for them through Internet searches. This is a smart strategy and it makes perfect sense.