HomeServices acquisions

closed 5 new purchases at the end of the year -

https://www.businesswire.com/news/home/20220111005903/en/Hom…

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Looks like these acquisitions roughly double the size of the firm, at first glance. Lots more growth ahead of them if they want it… roughly $4B in revenue now?

Looks like these acquisitions roughly double the size of the firm, at first glance. Lots more growth ahead of them if they want it… roughly $4B in revenue now?

No, I don’t think that is correct. These acquisitions do not come close to doubling the size of the firm.

Will someone with a knowledge of this sector please explain its profitability to Berkshire? Thank you.

Made some quick assumptions that I shoudn’t have, equating employee count I read somewhere with the number of new sales associates added (roughly doubling people count). Clearly a mistake. I see that the company has many divisions… brokerage, mortgage, franchising, title/escrow, insurance, relocation. New sales associates doesn’t equate to doubling revenue. My bad, sorry.

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From page K-10 of the 2020 10-K:

Non-Energy Businesses

HomeServices of America, Inc. (“HomeServices”) is the largest residential real estate brokerage firm in the United
States. In addition to providing traditional residential real estate brokerage services, HomeServices offers other integrated real
estate services, including mortgage originations and mortgage banking, title and closing services, property and casualty
insurance, home warranties, relocation services and other home-related services. It operates under 46 brand names with over
43,000 real estate agents in nearly 900 brokerage offices in 30 states and the District of Columbia.
HomeServices’ franchise network currently includes approximately 370 franchisees in over 1,600 brokerage offices
throughout the United States and Europe with over 53,000 real estate agents under two brand names. In exchange for certain
fees, HomeServices provides the right to use the Berkshire Hathaway HomeServices or Real Living brand names and other
related service marks, as well as providing orientation programs, training and consultation services, advertising programs and
other services.
HomeServices’ principal sources of revenue are dependent on residential real estate sales, which are generally higher
in the second and third quarters of each year. This business is highly competitive and subject to general real estate market
conditions.

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Will someone with a knowledge of this sector please explain its profitability to Berkshire? Thank you.

HomeServices is owned by BHE, which Berkshire Hathaway owns approximately 91% of. HomeServices has been growing through acquisitions and new franchise relationships for many years. There are owned brokerages and also affiliated franchisee brokerages that are not owned but may a franchise royalty to the network. There are also title, mortgage, escrow, relocation and moving company services.

HomeServices revenue for 2020 was $5.4 Billion and the first 9 months of 2021 revenue was $4.74 billion.

HomeServices after tax earnings for 2020 were $375 million and for the first 9 months of 2021 they earned $321 million.

Mortgage division profitability has been declining with the decline in mortgage activity but the company has continued to add both owned brokerages and franchise affiliates so next year should be another record year in Revenues.

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Has anyone on here used the services of Home Services for the purchase of a home. I may be in the market for an urban condo at some point when this crazy RE resets, if ever, and may inquire into a buyer broker there to assist me. Can you provide any details on the customer service offered you? The good, the bad, and the ugly? I need an honest real estate professional in my camp, as I don’t really trust the industry…no offense to anyone here who works in the industry, but I’ve had an experience in the past by a broker who was more concerned with trying to push me into something that wasn’t suitable for my needs or my interests. I felt as if that even my buyer broker, who is duty bound to represent my financial interests, seem more concerned about closing the deal, by lifting my offer, rather than sincerely stepping back objectively and telling me honestly that my offer was a bit overpriced and maybe I should rethink it. I didn’t suspect collusion with the selling agent, to try and close the deal, because I know that could be borderline illegal, but I know that these agents still may chum around after hours, informally, and maybe when no one is looking. Thx in advance for any advice.

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I did three transactions with BH this year in Los Angeles and Beverly Hills all on the sell side. He’s mu go to Realtor in LA. On the buy side I try to use the listing broker as it helps to get a deal done. It’s a competitive market place in LA and the firm is respected when it comes to selling. My broker is inn the top 100 of BHHS realtors. In Orange County I use another broker. So like most people I’m interested in the person not the firm. As a firm I see no advantage that they have over anyone else on the buy side. The sell side is different, especially if you’re looking for national exposure.

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