Berkshire Hathaway has partnered with Brookfield to create Berkshire Hathaway HomeServices, a “new premium franchise brand”, according to their blog’s announcement.

They and others are claiming that it will be a real game-changer, with Prudential California Realty’s COO Leeann Iacino saying, “Berkshire Hathaway HomeServices passion for our industry will redefine the future of real estate and the American Dream”.

My thoughts:

  • Prudential Real Estate had agreed to quit using the Prudential name in a previous agreement, so they had to come up with something.  Berkshire had invested in PCR years ago, so they were already committed, and apparently the name ‘Berkshire Hathaway HomeServices’ was the best they could do.
  • The management team for Berkshire Hathaway HomeServices is the same group of guys from Prudential – all long-timers who are used to the status quo.  You can’t say that Prudential Real Estate has brought any new ground-breakers to the industry since their inception, and check their website here – it looks like every other real estate website.  In the ‘about’ section they are still touting “the Rock”, with no mention of Berkshire.  They, like other big franchises, enjoy the current system, and won’t rock the boat.
  • The partner Brookfield is in it for the relocation business, and while that sounds promising, all it means for agents is paying out a 30% referral fee to a faceless corporate behemoth in exchange for leads – and great agents don’t need the business bad enough to pay that much vig.
  • Warren Buffett is 82, and Charlie Munger is 88 – what happens when they are gone?  BH will still be a successful enterprise, but with significantly less star power.  Bershire Hathaway hasn’t brought a single innovation to the real estate business, so name recognition is their sole contribution…at least so far.

This isn’t a game-changer – it is a commitment to keeping the game the same.

In the end, the big loser is the consumer, whose only want and need is transparency and a fair balance of cost-for-services.  Instead, the franchise companies – all of them – will be peddling their name-brand recognition and hype to sucker in more consumers (and agents too) into believing that their company image helps to sell homes.

But selling real estate is an individual sport, and the quality of your agent is all that matters.

Haven’t you seen great agents that don’t work for a franchise, and lousy agents who do?  There is no guarantee or promise that you will get a great agent just because you called a big-name company.

The big franchises don’t make much money, if any, from their great agents – but they make a killing on the agents who only sell a handful of homes (or less) per year.   Why do you think they employ 53,000 agents?

Why do you think Buffett got into this racket?  It’s not to change it, it is to exploit it further.


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