Buffett’s HomeServices Buys Chicago Property Broker (Update3)
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By Brian Louis

Sept. 1 (Bloomberg) -- The real estate brokerage controlled by Warren Buffett’sBerkshire Hathaway Inc. bought a Chicago- based agency, entering the third-largest U.S. metropolitan area amid signs of a rebounding real estate market.

HomeServices of America Inc. acquired Koenig & Strey GMAC Real Estate from Brookfield Residential Property Services, according to a statement by HomeServices, which didn’t disclose the terms.
Founded in 1961, Koenig & Strey has 21 offices and about 900 agents in the Chicago region.

New home sales in the U.S. rose more than forecast in July and sales of existing houses rose to the highest in almost two years, prompting some analysts to suggest the worst housing market since the Great Depression may have reached bottom. Falling home prices and a government tax credit for first-time buyers are bolstering demand for U.S. houses.

“Koenig & Strey is a respected company, with an excellent reputation and long-term ties to the community,” Ron Peltier, chairman and chief executive officer of Minneapolis-based HomeServices, said in the statement. HomeServices said it will “continue to look for additional opportunities, both here and throughout other major markets in the United States.”

Sales in the Chicago region rose less than 1 percent in July from a year earlier to 7,427, according to an Aug. 21 statement by the Illinois Association of Realtors. The median home price fell 16 percent to $213,500.

The Competition

HomeServices is the second-biggest U.S. residential brokerage after Apollo Management LP’s Realogy Corp. HomeServices’ revenue fell 18 percent to $279 million in the second quarter after housing prices dropped from the same period a year earlier, according to a regulatory filing by the company’s parent, MidAmerican Energy Holdings Co.

MidAmerican is majority-owned by Omaha, Nebraska-based Berkshire, whose chairman and CEO is Buffett.

Realogy, the Parsippany, New Jersey-based broker acquired by Apollo Management for $6.8 billion in 2007, reported a second-quarter loss last month of $15 million. Revenue from commissions fell 28 percent to $746 million and the average price of brokered home sale fell 15 percent to $188,489, Realogy said.

Realogy’s $1.7 billion of 10.5 percent notes due in 2014 rose 0.8 cent to 60 cents on the dollar to yield 26 percent at 3:02 p.m. New York time, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Realogy owns the Coldwell Banker and Century 21 brands.