HomeServices of America buys central California brokerage
- Article by: JIM BUCHTA
- Star Tribune
- January 9, 2013 - 9:10 PM
In its first deal of the new year, HomeServices of America has broadened its holdings in California with the acquisition of Guarantee Real Estate of Fresno, the dominant brokerage in the San Joaquin Valley.
Guarantee is a company with a deep connection to central California. It evolved from a building and loan company that opened in 1919 and now has more than 400 employees and has 13 offices in Fresno, Visalia and several other nearby cities.
Terms of the deal were not disclosed.
J. Scott Leonard, Guarantee's president and chief executive, said the deal will position the brokerage to compete in a changing and increasingly competitive marketplace.
"It's about the future and making sure that we are always in a position to provide people with the greatest amount of support, technology and resources," he said. "We can offer clients, agents and staff significantly more."
Leonard said that he's known HomeServices CEO Ron Peltier and President Robert Moline for about a decade. "This is an opportunity to capitalize on the resources and collective knowledge and experience," he said.
Minneapolis-based HomeServices, part of Warren Buffett's Berkshire Hathaway empire, is the nation's second-largest real estate holding company. In addition to Edina Realty in Minnesota, it already owns Prudential California, a sprawling brokerage that encompasses three distinct markets from San Diego to Los Angeles. Last year, HomeServices closed more than 145,000 transactions worth $42 billion. The company also operates a suite of affiliated services, including mortgage, title services and insurance. In 2012, the company closed almost $4 billion in mortgages.
"We're very encouraged and optimistic that we will have a very significant expansion," Peltier said. "This is the start of that whole process."
This is the first acquisition of the year for the company. Last year's buying spree included the purchase of a stake in two real estate brokerage networks that will enable Berkshire Hathaway to attach its name to its own branded brokerage franchise.
That joint venture with Toronto private equity firm Brookfield Asset Management included a majority interest in the Prudential and Real Living brokerages that will join forces to create Berkshire Hathaway HomeServices, which will be based in Irvine, Calif.
That deal was something of a departure from the HomeServices strategy, which has been to acquire regional companies with strong local brand recognition. For example, in June 2012 the company bought Tri-Lakes Realtors, one of the top companies in the Branson, Mo., area. The company has 40 sales associates with three offices in Missouri. As part of the deal, the brokerage merged with another local favorite and current HomeServices affiliate, Carol Jones Realtors.
A big year for acquisitions?
Analysts expect 2013 to be a banner year for acquisitions and mergers of real estate companies across the country. Brokerage prices are improving, but are still well below peak. And with the housing market on the mend, real estate holding companies are financially well positioned to pursue brokerages that will help them expand market share. Peltier expects 2013 to exceed last year.
Steve Murray, editor and partner at Real Trends and Murray Consulting, said the deal makes a lot of sense for both companies, especially at a time when the industry is on the cusp of big changes. He expects 2013 to be the biggest year for deal-making since 2006 and 2007. HomeServices has the considerable financial backing of Berkshire Hathaway, and Realogy -- HomeServices' primary competitor -- is now better-positioned for expansion after an IPO last September.
"It's going to be a big year," Murray said.
Jim Buchta 612-673-7376
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