Twin Cities-based HomeServices of America, Inc. has closed its biggest real estate deal yet.
The Berkshire Hathaway affiliate and parent of Edina Realty paid an undisclosed sum for Long & Foster Cos. Inc., an organization with 11,000 agents along much of the East Coast.
The deal makes HomeServices the largest real estate services provider in the country based on total transactions this year, according to Real Trends, a Denver-based trade publication.
“It’s huge,” said Steve Murray, publisher of Real Trends, who also advised Long & Foster. “This is a very big success for HomeServices.”
Murray said the deal is 2½ times larger than anything he’s seen happen in at least three decades.
The acquisition includes the entire collection of Long & Foster companies, including Long & Foster Real Estate and its mortgage, settlement services, insurance and property management companies.
Long & Foster is headquartered in Chantilly, Va., and was the largest independent residential real estate brand by volume and the second largest independent brand by transaction sides, according to the 2017 Real Trends 500 report.
The company has agents in more than 230 offices in several mid-Atlantic states, including Virginia, Maryland and the District of Columbia.
Last year the company had nearly $29 billion in sales volume and more than 81,000 home sale transactions, and its mortgage business originated $3.3 billion in home loans, representing nearly 12,000 mortgages.
Long & Foster’s settlement services companies closed more than 20,000 title and escrow transactions, and Long & Foster Insurance issued an estimated 8,300 property and casualty insurance policies.
The deal helps close several key market gaps for HomeServices, which will now have more than 41,000 real estate professionals who this year are expected to complete nearly 340,000 home and nearly 200,000 mortgage, title, insurance and escrow deals in 30 states and the District of Columbia.
“We are incredibly proud to have the Long & Foster Cos. join the HomeServices family,” said Ron Peltier, HomeServices chairman and chief executive.
HomeServices has been on a multiyear brokerage buying spree, acquiring locally owned companies that dominate markets in robust metros across the country.
The company’s acquisition strategy is to leave the brokerage name, brand and usually its leadership intact.
In April, HomeServices of America expanded its East Coast holdings with the acquisition of New Jersey-based Gloria Nilson & Co. Real Estate, which at the time had more than 730 sales associates in 25 offices in New Jersey and Pennsylvania. In 2016, the brokerage closed more than 3,700 deals worth nearly $1.5 billion in total sales.
That is the third acquisition in the tri-state area this year for the company, but the Long & Foster deal is by far the largest. The next biggest was the 2013 acquisition of Philadelphia-based Fox and Roach group, which was only about one-third as large as Long & Foster based on transaction volume.
“This is clearly among the best of the opportunities that we’ve seen,” said Peltier.
Peltier said that conversations about a possible sale started at least 15 years ago during casual conversations with Wes Foster, who is now approaching his mid 80s.
Peltier said that while there are no other companies that can compare to Long & Foster in terms of its size, the company will keep looking at other acquisition targets in markets where the company does not yet own the dominant brokerages. That includes the San Francisco Bay Area and Texas. Foster co-founded the company almost 50 years ago with Henry Long.
Foster will remain with the company as chairman emeritus, while President and COO Jeff Detwiler will assume the role of chief executive.
“Finding the right partner to maintain the legacy, culture, and integrity of Long & Foster was of utmost importance to me,” Foster said in a statement. “I couldn’t be more pleased that we are joining an organization known for its impeccable reputation and commitment to protecting brands. Joining HomeServices ensures that our history of market leadership and industry expertise continues.”