Warren Buffett Company Acquires Esslingerwootenmaxwell Realtors
Written by Leslie Kraft on July 24, 2003
By Leslie Kraft
Investor Warren Buffett is launching a real-estate brokerage acquisition effort in Florida with an announcement Tuesday that his company HomeServices of America Inc has purchased Esslinger-Wooten-Maxwell Realtors.
Minneapolis-based HomeServices – a subsidiary of Mr. Buffett’s investment company, Berkshire Hathaway – purchased the 39-year-old South Florida brokerage from Allen Harper and Ron Shuffield, owners since 1984. The purchase price was not disclosed.
Mr. Shuffield said he will remain president of Esslinger, or EWM, which will retain its name. HomeServices also purchased EWM’s Embassy Financial Service, Columbia Title and First Reserve Insurance units.
Esslinger closed $1.8 billion in transactions last year from 11 offices and 750 associates in Miami-Dade and Broward counties, company officials said. HomeServices will provide Esslinger with more capital to hire additional staff, Mr. Shuffield said.
HomeServices said the purchase is a jumping-off point for its plan to expand in the state.
"EWM gives us a stronghold in the South Florida market and a platform from which to expand our presence throughout Florida," said Ron Peltier, chief executive of HomeServices, which owns 16 real-estate companies in 16 states with $45 billion in annual sales and is the second-largest real-estate brokerage in the US.
"Florida is one of the nation’s most compelling residential real-estate markets with a preponderance of second and third homes along with an ever-increasing population," Mr. Peltier said. "The EWM acquisition provides us with a premier company through which we intend to expand in what is the nation’s fourth-most-populous state behind California, Texas and New York."
HomeServices sells integrated real-estate services, including brokerage mortgage originations, title and closing services home warranties and property and casualty insurance. Mr. Peltier said the company’s strategy involves purchasing reputable, upscale real-estate firms throughout the country while leaving their leadership intact.
Mr. Shuffield said the acquisition will only help Esslinger.
"The benefits from the sale will be service synergies; ability to hire additional, quality staff; and access to much more current market information.
"Although we have been able to grow our business well," Mr. Shuffield said, "we recognize that attempting to grow without being properly capitalized is an industrywide problem. We are expecting a lot more consolidation in the business nationwide."
He said he will recommend to HomeServices other Florida-based real-estate companies that could be candidates for acquisition. Mr. Shuffield said other Florida firms purchased by HomeServices would retain their names or carry the Esslinger brand.
The transaction continues a trend of consolidation among independent luxury real-estate firms in South Florida, which began in October with Coldwell Banker’s purchases of Wimbish-Riteway in October and Arvida Realty in April.
Industry leaders had speculated that Esslinger would also be purchased by Coldwell. Esslinger had said it would not be part of a deal that would cost the company its identity. Coldwell’s policy is to put its brand on companies it acquires.
"You lose the aspect of national brand recognition when you have one company operating nationally under different names," said Pat Dahne, Coldwell Banker regional president for Miami-Dade County. "But the national trend will be for local Realty companies to become part of large, national groups because it is harder for them to compete due to shrinking profit margins."
Jo-Ann Forster of Coldwell Banker Previews in Coconut Grove said the Esslinger sale is a step toward homogeny for local real-estate companies.
"There are only so many ways to reinvent the wheel as the smaller companies are bought out," she said. "In the end, the focus will be on the best agents – not the companies because (companies) will run out of ways to distinguish themselves."