By Steve Murray
Tuesday was a landmark day in the industry with the announcement that Berkshire Hathaway, the owner of HomeServices (second largest owned brokerage in the country) had formed a venture with Brookfield to operate the Prudential and Real Living franchise systems. In addition, for the first time, Berkshire Hathaway lent its name to a consumer focused business. The new brand name, Berkshire Hathaway HomeServices, will be available to the franchises in January 2013.
We think there are several benefits to this arrangement. First, the leadership team of Berkshire Hathaway HomeServices is a group of highly respected real estate veterans. They have a solid grasp of the keys to success in residential brokerage and related core services. Owning and operating the second largest residential brokerage in the nation also gives them key insights into what works in the market. Also the teams at both Prudential Real Estate Affiliates and Real Living are knowledgeable, skilled and certainly ready to go back to competing in the market after a period of uncertainty.
Second, the name Berkshire Hathaway, while not well known to most consumers, nonetheless will give franchises a very strong story to tell. There are positive attributes associated with the name for both sales professionals and housing consumers. It remains to be crafted but one can see the outlines emerging. Financial strength, integrity, longevity, respect, entrepreneurship and brand are among the attributes that can be associated with Berkshire Hathaway.
Lastly, through a connection with Brookfield Relocation, there will be significant referral and lead opportunities available. While we do not know the exact makeup of this part of the relationship between Berkshire and Brookfield we expect that this has been worked out to the satisfaction of both parties to the deal.
With the successful public offering of Realogy and this deal, any uncertainty about these organizations is now done. Both have staying power and both have shown the ability to persevere through hard times. It will be interesting to see what directions both take now that housing is recovering.
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