Watch out Savills, Knight Frank and Hamptons International. Warren Buffett is coming to get you.
Well, sort of. Berkshire Hathaway HomeServices, the US-based residential brokerage part-owned by Buffett’s investment company Berkshire Hathaway, is on a mission to expand globally.
And last week senior vice president of international operations Peter Turtzo was in London on the prowl for a new EMEA managing director to help find established estate agency businesses across Europe to join the Berkshire Hathaway HomesServices platform.
Turtzo says Berkshire Hathaway is one of the most respected brands in the world – Barron’s would agree, ranking it third last year behind Apple and Disney – but that the HomeServices business is not capitalising on that outside of the US.
Until now.
Official expansion into global markets will begin next year, but work on being prepared for an influx of overseas house-hunters has already begun. The website can now be translated into 10 languages, including Chinese, German, Italian, Japanese, Portuguese and Spanish, and convert currency and measurements at the click of two buttons. It is not ground-breaking stuff but an important step if you want to appeal to a global community of potential consumers, says Turtzo.
“A key priority in global expansion is to help our existing US franchisees earn more business from beyond our borders,” says Turtzo. “Our investment in these resources will help our network capture international client leads and generate transaction opportunities.”
Turtzo says some 4% of the US housing market is made up of overseas investors and that is a percentage he expects to rise.
China is the leading the list of overseas investors for US residential, followed by Canada, the UK and India. Venezuelan, Argentinean, Brazilian and Colombian investors are also active in the market, although more localised in targeting areas such as Florida and New York.
“The Asian market is still strong,” says Turtzo. “The current interest is in the Pacific Northwest and is driven a lot by Chinese students coming to study in the US.”
A stable residential market, interest rates at record lows and the perception that the US is a safe and attractive place to invest is all helping to drive an increase in activity from foreign buyers, but the attraction also spreads to the US brokers, says Turtzo.
Sales prices of residential units bought by Chinese investors, for example, are three times the average paid by US buyers. And 60% of all overseas investments are cash purchases, stripping out one of the most troublesome elements of a transaction – the loan process.
And while attracting overseas investors to the US residential market forms a key part of Berkshire Hathaway HomeServices’ international expansion plans, being able to offer a comprehensive, global service to all users – domestic and international – is the ultimate goal.
Phase one of the expansion is focused on Europe and will begin with the appointment of the EMEA managing director next month, followed by a push into Asia with a managing director for the Asia-Pacific Rim later this year and then an Americas managing director. Then “high quality, established” estate agency businesses will be sought to join the franchise, taking on the Berkshire Hathaway HomeServices brand.
“By 2020 we want to be operational in 20 countries,” says Turtzo. “But we are not in a race. The last thing a restaurant wants is the diner. Everything needs to be in place first. Our customer is the estate agent and we have to have the systems in place for them to guide their customer – the consumer.”
And what does he think the established global estate agencies will make of the new kid on the block? “We have managed in a highly competitive environment in the US,” he says. “And competition makes everyone better.”
It could be delivered by Buffett himself.
“It is better to hang out with people better than you. Pick out associates whose behaviour is better than yours and you will drift in that direction,” the magnate and philanthropist has said.
So maybe it is not “watch out Savills, Knight Frank and Hamptons”, but a “you’re welcome”.
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