An affiliate of billionaire investor Warren Buffett's Berkshire Hathaway has bought Fresno-based Guarantee Real Estate in what could be a forerunner of consolidation in the local real estate market.
HomeServices of America and Guarantee announced the deal Wednesday. Terms were not disclosed.
Guarantee -- one of Fresno's oldest residential real estate brokerage companies -- will keep its name, and its leadership and the services will not change, its longtime owners said.
What will change is the company's visibility and its ability to share information on a national level.
"Real estate is the third-largest user of the Internet and what happens now is people find out about Fresno real estate even when they're thousands of miles away," said Paul Gibson, who with his wife, Joan Eaton, has owned Guarantee for 22 years. "Aligning Guarantee as an affiliate with Berkshire Hathaway gives us a national and international exposure that's unparalleled."
Eaton said the company was not financially in trouble. It has remained strong even through the recession when Fresno's housing market came to a standstill, she said.
Guarantee has been approached several times over the years by national real estate companies to sell or to franchise, Eaton said. Guarantee executives have known HomeServices' top managers for 10 years, she said, and the company picked a good time to make its pitch.
HomeServices, based in Minneapolis, is the second-largest full-service residential firm in the country with 27 real estate companies under its ownership. NRT, whose brands include Coldwell Banker and ERA, is the largest residential real estate brokerage company in the nation.
Last month, HomeServices bought the nationwide Prudential real estate network, which has offices in Fresno and Tulare. The addition of Guarantee is part of the company's expansion plan in California.
HomeServices is buying local, leading real estate companies, letting them keep their names and management to continue what they do, Gibson said.
"This speaks to Fresno being on everybody's radar screen," Gibson said. "We've made quite a few listings of the hottest markets and things to come."
Guarantee was founded in 1919 as a savings and loans company.
The financial corporation expanded into real estate sales in 1983 when it bought the Strachan Real Estate firm, then one of Fresno's five largest real estate companies.
Now, Guarantee has more than 400 sales associates in 13 offices across the Valley, including Fresno, Clovis, Prather, Shaver Lake, Reedley, Kingsburg, Dinuba and Visalia.
The deal came as a surprise to some Fresno real estate experts and competitors because of Guarantee's long history of local ownership. But they say this could be a sign of things to come as the housing market recovers.
"Local ownership is important especially in an area as unique as the San Joaquin Valley," said John Shamshoian, owner of Realty Concepts, a brokerage firm in Fresno.
Shamshoian, president of the Fresno Association of Realtors, who founded his company in 1991, said he too has been approached by national companies to sell over the years, but wants his business to remain locally owned.
Guarantee's largest local competitor is Fresno-based London Properties. London Properties officials could not be reached for comment Wednesday.
Fresno State's Andrew Hansz, the director of the Gazarian Real Estate Center, said the Guarantee deal is the start of a trend in the real estate market.
"There's big money out there," Hansz said. "Corporations and institutions, pension funds, endowments and everything are looking to participate in the housing market recovery."
Advances in technology and data allow investors, brokers and developers to do business anywhere, which is regionalizing and nationalizing real estate, Hansz said.
"I think what Wall Street is doing now is looking at how they can participate in the housing market from an equity and service perspective," Hansz said.
"Sounds like Warren Buffett's kind of leading the charge."
The new ownership is ideal for a company like Guarantee, said Robin Kane, a Fresno real estate analyst.
"The buying and selling of homes is still a one-on-one experience," Kane said.
But the office work associated with running your own business can be done more efficiently and cheaply in a big company, he said.
Guarantee still has local people handling the daily operations, but now they have more resources, said Kane, whose own business, RCK Organization, was acquired by national company Hendricks & Partners in July.
Hendricks was then bought by a Berkshire Hathaway company last month.