Warren Buffett’s Berkshire Hathaway is reportedly in talks to sell its real estate brokerage business, HomeServices of America, to Compass Inc. The potential sale has sparked speculation about the future of the struggling real estate industry. HomeServices CEO Gino Blefari sent a note to employees saying no such sale is under consideration.
However, the news suggests that the 94-year-old Buffett may have lost faith in the real estate market. “He won’t sell unless he sees a continued drain. He sold the newspapers when he saw no future without consolidation,” said Bill Stone, chief investment officer at Glenview Trust Company.
Buffett invested in newspapers in the 1970s but sold them in 2020 as advertising revenue shrank and profits disappeared. Now, a similar resignation may be coming for real estate services. HomeServices became part of Berkshire following a 1999 deal to buy utility giant MidAmerican Energy.
The unit generated $4.4 billion in revenue in 2024 but suffered a net loss of $113 million, reversing profits from previous years.
Buffett’s consideration of HomeServices sale
Berkshire attributed the profit slump to ongoing real estate industry litigation charges.
In April 2024, HomeServices agreed to pay $250 million to settle lawsuits claiming that real estate brokerage practices forced homeowners to pay inflated commissions. Buffett also noted that the real estate brokerage business continues to be hurt by the availability of homes for sale and high home prices. Pending home sales dropped 4.6% in January to the lowest level since 2001.
The potential acquisition aligns with Compass’s efforts to expand its footprint in the real estate market. Details about the terms of the deal and its potential value are still under wraps. The acquisition talks come amid broader consolidation trends in the real estate industry, as companies seek to leverage scale and technology to serve clients better and manage operations more efficiently.
Buffett’s potential sale of HomeServices of America has raised concerns about the future of the real estate market. Experts are warning of declining affordability, rising vacancies, and tightening lending conditions. Real estate investors are advised to stay informed and cautious as the situation unfolds.
Buffett’s move could be a precursor to more significant changes in the U.S. housing market.
Image Credits: Photo by Dillon Kydd on Unsplash
