Where Real Estate Gets Its Dirt

Warren Buffet Bets Big On Real Estate

HomeServices and Brookfield Announce a New Residential Real Estate Franchise Brand—Berkshire Hathaway HomeServices®

“The combined networks of more than 53,000 Prudential Real Estate and Real Living Real Estate agents generated in excess of $72 billion in residential real estate sales volume in 2011, and operate across more than 1,700 U.S. locations.

“Berkshire Hathaway HomeServices is a new franchise brand built upon the financial strength and leadership of Brookfield and HomeServices,” said Warren Buffett, chairman and CEO of Berkshire Hathaway Inc. “I am confident that these partners will deliver value to the residential real estate industry, and I am pleased to have Berkshire Hathaway be a part of the new brand.”

“We are honored and proud to be entrusted with the use of the Berkshire Hathaway name as our new real estate franchise brand,” said Ron Peltier, chairman and CEO of HomeServices. “We will convey the strength of Berkshire Hathaway’s reputation and its associated principles of integrity and financial stability in everything we do.”

The message is loud and clear. Warren Buffett has decided its time to bet on real estate again. And bet BIG.

This is great news for all of us in the real estate industry. But lets peel away the layers of the onion.

If you look up wwww.BershireHathawayHS.com (BHHS) on WhoiS you find out that the URL was purchased by HomeServices back in June of 2012. So either Home Services was already making plans to rebrand itself back then or this deal has been in the works for a long time.

This move solves Brookfield’s brand problem with Prudential. Since the Prudential name was going away they needed to come up with a brand the Pru brokers would not stick their noses up to. How are you going to compete with a “piece of the rock”? I think the Berkshire Hathaway brand will be something that will be very enticing to Pru brokers. I mean, what agent, at a listing presentation wouldn’t want to say that their company is owned by Warren Buffett?

Which brings me to another point. This could be a big risk for Berkshire Hathaway. They are leveraging the Berkshire Hathaway name for the first time. And who are the stewards to this exclusive brand? Real Estate Agents, which are just a couple steps above used car salesmen on the public respect scale.

Ron Peltier as Chairman makes sense. Earl Lee as CEO is interesting. Buffett is famous for being a great business operator and cultivating managerial talent. Broker-owners love Earl, but will he cut the mustard?

The other two execs, recently pictured with Earl on the August cover of RIS Media’s REAL ESTATE Magazine, are also interesting choices.

Aleya Chattopadhay rose from the ranks of Brookfield to become the CMO. She has a lot of experience internationally and in conversations I’ve had with her I can attest to her smarts and passion about the industry.

Steve Phillips came from GMAC Relo division before he joined Brookfield. I wonder since this is technically a JV between BHHS and Brookfield if they are still employees of Brookfield or have they left Toronto for good?

Time will tell.

The rate this industry is changing is dizzying. Think about it.

Here comes the Canadians!
Brookfield acquires GMAC Real Estate
Brookfield acquires Real Living, then merges GMAC Real Estate brand into Real Living.

Here come the “Interlopers”!
Zillow goes public
Trulia goes public

The Old Guard makes a stand!
Realogy goes public

There go the Canadians!
HomeServices acquires majority stake in Real Living and Prudential RE from Brookfield.

My head hurts!

A few takeaways:

HomeServices of America has always had a stable of multi-branded real estate companies. Think Long Real Estate, Edina, Prudential X,Y, Z etc. While I can’t see a company like Edina changing brand names I do see the Prudential brands under HSofA moving toward the BHHS brand. This will give them a web presence they haven’t had before. If I was Zillow and Trulia I would be watching these developments very carefully.

A wise man once told me that Joint Ventures never work. In this case HomeServices owns the majority share, so that will help, and Brookfield gets the cachet of being partners with Warren Buffett.

You gotta feel for the staff at what was GMAC, Real Living and Prudential Real Estate. They been through 3 years of nothing but change, and now this!

The Harley Rouda story that leaked yesterday I reported on. Was it an honest mistake, a crossing of wires due to the Hurricane? Or was Harley tweaking Brookfield’s nose?

No matter. Right now I’m optimistic on real estate’s future.

So Nouriel Roubini can go suck on it. The Housing Recovery is official, Warren Buffett said so!

Brookfield RPS sells majority interest of Real Living and Prudential to HomeServices

Rouda returning to lead HER as Berkshire Hathaway takes stake in Real Living

“Brookfield has sold, or plans to sell, that controlling interest in Real Living to HomeServices of America Inc., a Berkshire Hathaway (NYSE:BRK.B)-owned owner of numerous local residential real estate brokerages, according to the HER press release.
HomeServices, however, has yet to post the announcement on their website.
HER has retained the right to use the Real Living trademarks for a year as the regional brokerage considers the direction HomeServices takes the Real Living brand, according to Jim Stevenson, HER’s senior vice president of marketing.”

This is huge news. You gotta feel for everyone at Real Living, GMAC and now Prudential Real Estate. These guys have gone thru major changes in the past 3 years and it going to change even more.

Kristi Graning is leaving RE/MAX

Kristi Graning
When I first heard the news I was shocked.

After a stunning 21 year career Kristi Graning has announced she is leaving RE/MAX. I’ve written a lot about Kristi on this blog. She is what I call a “triple-threat” in the industry. Having worked with her back when RE/MAX launched their “network of broker IDX websites” (which put RE/MAX as the solid number 1 franchisor on the web) I witnessed first hand the commitment she gave RE/MAX and the huge accomplishments she made during her tenure there.

This move gives me some pause on the state of RE/MAX currently. This departure was clearly Kristi’s decision and makes me wonder what she knows that the rest of us don’t know.

She had posted on Facebook that she has been talking to several companies but decided to spend the summer with her boys.

I wish her nothing but success and know that we will be hearing from her soon enough on her next chapter.

RE/MAX selects Homes.com

This is a wonderful story. It’s a story only a few people in the industry can fully appreciate. I’m glad I’m one of them.

Both RE/MAX and Dominion Enterprises have gone through a lot in the past few years and its great to see when the good guys win.

It all began when Dave Liniger made the statement that the industry was being besieged by companies that were “bring nothing but a fork to the potluck”. Then in 2005 RE/MAX announced a bold new strategy where RE/MAX International would create a “network of broker idx sites” under remax.com and give all the leads free to RE/MAX associates. They selected eNeighborhoods as their vendor and with Kristi Graning leading the effort on the RE/MAX side they went on a roll that solidified RE/MAX as the top innovator in the online real estate market for the next several years.

I was leading the sales and marketing division at eNeighborhoods when we signed the deal with RE/MAX but the real credit goes to Andy Woolley for recognizing the opportunity and leading the effort to make it come to life.

A lot has happen since. eNeighborhoods had been bought by Dominion Enterprises, and then Dominion Enterprises tried to sell itself unsuccessfully. And of course the real estate crisis took over the country. Both companies retrenched. In the case of Dominion Enterprises they consolidated most of the companies they acquired and formed Homes Media Solutions. And who can blame them? Homes.com is a true player in the online real estate space. It made sense for them to finally do the hard work on integrating all the companies under one platform.

RE/MAX has also dealt with internal struggles as well. Independent brokers have asserted their independence from the mothership with mixed results. But with this partnership it appears that RE/MAX corporate has regained some of their footing. And ask any vendor in the industry what franchisor would be number one on their list to partner with? The answer is RE/MAX. Why? Despite the fascination with “agent count” anyone that really knows this industry knows that RE/MAX has consistently the most productive agents in the business. Period.

So congratulations all around. RE/MAX is hosting their annual convention in Las Vegas right now and I’m sure Andy, Kristi, Marnie, Staci and the rest of the crew are celebrating over some good food and great wine (chosen expertly by Andy ‘natch!).

Cheers!

Full Press Release Below:
———————————————————————————-
Homes.com and RE/MAX® Launch New Online Strategic Partnership

Homes.com selected to power remax.com and create new mobile apps suite

(Norfolk, VA, March 6, 2012) —Homes.com and RE/MAX®, LLC, announced today the launch of a major new online marketing partnership. RE/MAX has selected Homes.com to power the new remax.com website and the newly released suite of RE/MAX mobile applications for Apple and Android mobile devices. The two organizations will also be launching collaborative efforts to market Homes.com local advertising products and the new Homes Connect marketing platform to RE/MAX Sales Associates throughout North America.

“We’re thrilled that RE/MAX has selected Homes.com to power the most important elements of their online marketing efforts. Remax.com is clearly a leading property search destination and is the cornerstone of the RE/MAX online strategy,” says Brock MacLean, executive vice president of Homes.com. “By combining our proven search technology with the powerful reach of our Homes.com website and mobile applications, we’ve developed a complementary approach to ensure traffic and leads from both websites are delivered efficiently and directly to RE/MAX Sales Associates.”

Key aspects of the Homes.com and RE/MAX partnership include:

Homes.com will build and host the new remax.com, leveraging the same innovative technology that powers Homes.com and Homes Connect.
The new RE/MAX mobile application suite for Apple and Android devices was developed by and is hosted on the Homes.com platform. Versions for other devices will be available soon.
RE/MAX listings will also be showcased on Homes.com, driving new traffic to remax.com and leads downstream to RE/MAX offices and Sales Associates.
A RE/MAX co-branded version of Homes Connect is being marketed by the two companies to RE/MAX Broker-Owners and Sales Associates throughout North America.
“The selection of Homes.com as our preferred online marketing partner is the result of a two year evaluation, and considerations of a variety of approaches and potential partners,” said Marnie Blanco, RE/MAX Vice President of eBusiness. “In the process, it became clear that the best approach was to leverage the powerful technology of a national listing portal that could lead consumers to remax.com. Homes.com provides RE/MAX all the components and the clearest path to making this complementary approach a reality.”

“With all the negative attention lately surrounding syndication, it’s important the Homes.com brand and mission avoid getting caught up in that fray,” added MacLean. “We offer brokers and franchisors a unique approach, combining our innovative technology services with our vast consumer reach. When a technology strategy is in line with a marketing strategy, as it is with this new RE/MAX partnership, the two complement each other beautifully.”

About Homes.com

Homes.com, part of the Homes Media Solutions division of DominionEnterprises, is a leading provider of real estate marketing and media services, including brand advertising, property listing exposure and syndication, search engine marketing and instant response lead generation. Homes Connect by Homes.com offers the real estate industry’s first-ever all-inclusive marketing platform for agents and brokers featuring single-login convenience. Homes.com is visited by over 10 million consumers each month to search nearly 4 million properties for sale or rent, to locate real estate agents in their area and to find useful home buying tips. For more information, visit www.Homes.com.

About Dominion Enterprises

Dominion Enterprises is a leading marketing services and publishing company serving the automotive, recreational and commercial vehicle, real estate, apartment rental, employment, parenting, travel, and daily deals industries. The company’s businesses provide a comprehensive suite of technology-based marketing solutions including Internet advertising, lead generation, CRM, website design and hosting, and data management services. The company has more than 60 market-leading websites reaching more than 20.9 million unique visitors monthly, and more than 280 magazines with a weekly circulation of 2.4 million. Headquartered in Norfolk, Va., the company has 3,300 employees in more than 186 offices in the United States, Canada, England and Italy. For more information, visit www.DominionEnterprises.com.

About the RE/MAX Network

RE/MAX was founded in 1973 by Dave and Gail Liniger, real estate industry visionaries who still lead the Denver-based global franchisor today. RE/MAX is recognized as one of the leading real estate franchise companies with the most productive sales force in the industry and a global reach of more than 80 countries. With a passion for the communities in which its agents live and work, RE/MAX is proud to have raised more than $120 million for Children’s Miracle Network Hospitals, Susan G. Komen for the Cure® and other charities. Nobody in the world sells more real estate than RE/MAX. For more information about RE/MAX, please visit www.remax.com or www.joinremax.com.

The Century 21 Super Bowl Ad I would have run.

I was a bit unimpressed with the line up of Super Bowl ads this year. I did think the Jerry Seinfeld ad for the NSX was very funny. But the “Its halftime in America” ad featuring Clint Eastwood was by far my favorite. It literally gave me chills. See below if you missed it.

There was a bit of buzz in the industry when Century 21 announced that they too were going to run an ad during the Super Bowl. At the best I would call the ad “cute“, but at least they were investing in their agents and for that I appauld them.

If I were going to do an ad I would position Century 21 as the real estate company that is going to lead this country out of the real estate crisis. A lofty goal? Yes, but done correctly it would position Century 21 agents as the brand to help rebuild the American Dream. To me that’s “Bolder”.

Here’s the ad. The narrator would be Morgan Freedman (of course!). He would be reading a poem adapted from “The Star Thrower” by Loren Eiseley.

OUTSIDE.

The sun is rising, its morning.

INT. A car is driving through a neighborhood. Views of houses going by thru the windshield.

NARRATOR BEGINS SPEAKING

“An old man had a habit of early morning walks on the beach. One day, after a storm, he saw a human figure in the distance moving like a dancer. As he came closer he saw that it was a young woman and she was not dancing but was reaching down to the sand, picking up a starfish and very gently throwing them into the ocean.

Images of Century 21 agents putting up signs for an open house. Getting stuff out of their trunk. Preparing a house.


”Young lady,” he asked, “Why are you throwing starfish into the ocean?”


The young lady replied, “The sun is up, and the tide is going out, and if I do not throw them in they will die.”

Images of Century 21 agents meeting with buyers, showing property. Kids running up stairs and down hallways.


“But young lady, do you not realize that there are miles and miles of beach and starfish all along it? You cannot possibly make a difference.”

The young woman listened politely, paused and then bent down, picked up another starfish and threw it into the sea, past the breaking waves,

Images of Century 21 agents shaking hands with young families.


saying, “It made a difference for that one.“


The old man looked at the young woman inquisitively and thought about what she had done. Inspired, he joined her in throwing starfish back into the sea. Soon others joined, and all the starfish were saved.

Image of thousands of Century 21 agents walking (wearing gold jackets?) along the shore hurling starfish towards the ocean.

Fade to Century 21 logo.

END

Put that in your pipe and smoke it Parsippany.

When REN?

A few things have been written about MOVE’s latest announcement on the creation of the “Real Estate Network” (REN). MOVE’s says REN will “extend the syndication of property listings to highly trafficked websites operate by real estate franchisors and brokerage networks.”

I have to say I think this is a brilliant strategy on MOVE’s part. Here’s why:

1. Zillow and Trulia have already proven quantity (and quality for that matter) of listing data isn’t necessary to operate a highly trafficked real estate portal.

2. This further hedges MOVE’s position. MOVE currently depends upon its agreement with the National Association of REALTORS (NAR) for listings and does not run a national IDX network.

The big question is “who cares?” So I’m going to focus on a few tipping points that would cause a Franchisor or brokerage network to implement a REN feed on their respective websites.

1. SEO benefits
I think this is the weakest case. Most Franchisors running sophisticated IDX networks from vendors like Homes Media Solutions (formerly eNeighborhoods) and RED (formerly LPS Real Estate Group) have already figured out how to maximize SEO benefits using a platform designed to be a launching site for a “network of broker idx sites”.

2. Cost
This is a big factor. As I’ve stated Zillow and Trulia have already proven quantity of listings doesn’t matter. Aggregating MLS data from multiple sources managing all those different display rules and paying those MLS fees have a huge cost associated with it. What if RE/MAX is paying their IDX vendor $70,000 per month and MOVE is offering REN for $7,000 per month. Is it possible that a company like RE/MAX might opt to save the money? Maybe.

3. The MLS Two Step
This is also a potential decision point. Lets say that a particular MLS provider, for the purposes of this example the Houston Associaiton of REALTORS (HAR) has made is very difficult to display listings from their MLS. The Franchisor always has to jump thru a few extra more hoops when dealing with HAR. Will some Franchisors be willing to forego not having all Houston listings as long was they don’t have to talk to Sam Scott anymore? Maybe : )

4. Filling the gaps
The REN might be a great way for new and exisiting Franchisors to supplement coverage in areas where they don’t have a Franchisee yet. According to the rules they would still need a license in the state, but thats relatively easy. This makes Realty Executives participation as a charter member of REN a little clearer.

5. Exposure.
Search traffic to real estate portals is still heavily brand related. Long tail searches are a relative minor piece to the equation. It was announced recently that Century 21 is running a Super Bowl ad on February 5th. Depending on when REN would be implemented how ironic would it be when Realty Executives announced to their agents that all their listings would be advertised during the Super Bowl. Pass the chips!

In a way MOVE, with the announcement of REN, has changed the conversation away from IDX (something they are very weak in) to Syndication (something they are very strong in).

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle”
― Sun Tzu, The Art of War, Special Edition

Smart MOVE.

Market Leader pays Imprev 1.45M early termination fee

Market Leader, Inc Form 8K filed 12/30/2011

“The termination was effective December 31, 2011. As a result, Imprev has released Market Leader from future minimum contractual liabilities totaling $2.6 million, as well as any and all future revenue sharing payments related to the revenue generated from the premium SaaS solutions being provided to Keller Williams professionals. Market Leader will pay Imprev early termination fees totaling $1.45 million, which the Company expects to record as contract termination costs in the fourth quarter of 2011.
Concurrently, both parties entered into a transitional services agreement for the period January 1, 2012 through June 30, 2012 for which the Company will pay Imprev $600,000.

Starting in the first quarter of 2012, Market Leader will offer its own marketing, design, and printing capabilities as fully integrated components of its SaaS platform and products based on the solutions that were acquired as part of the August 2011 acquisition of SharperAgent.”

Ouch.

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