San Diego brokerage buys Newport Beach luxury-home chain
The team that built California’s largest real estate chain then sold it indirectly to Warren Buffett closed a deal Monday, Feb. 12, to acquire 12 Sotheby’s International Realty offices in Orange, Riverside and Los Angeles counties, forming a unified Sotheby’s brand stretching from Long Beach to the Mexican border.
Under the deal, San Diego-based Pacific Sotheby’s International Realty is buying Newport Beach-based HOM Sotheby’s International Realty, creating – the buyers and sellers say — the largest Sotheby’s franchise in the nation, if not the world.
Officials at the luxury chain’s home office couldn’t be reached to confirm that claim.
But the deal, owners say, has created a chain with 32 offices, more than 900 agents and a 2017 sales volume exceeding $6 billion in 2017.
HOM, which has an office in Long Beach, plus five Orange County offices and four in the Palm Springs area, will be rebranded under the Pacific Sotheby’s name.
The deal has been in the works for three years, said Steve Games, co-owner of Pacific Sotheby’s. Terms of the transaction weren’t disclosed.
“The whole idea of putting the two companies together was a long-term dream,” Games said. “This year, both HOM was ready to sell to us, and we were ready to buy.”
Games and his partner, Nyda Jones-Church, where the owners of Prudential California Realty, a chain of real estate offices stretching from San Diego to Santa Maria. They sold the company in the mid-2000’s to a firm later acquired by Buffett, the so-called Oracle of Omaha, and later was rebranded into Berkshire Hathaway Home Services.
Games and Jones-Church formed a new partnership in 2012 with Brian Arrington, then owner of Pacific Sotheby, and launched a new expansion, Games said.
Mike Shapiro, chairman and majority owner of HOM, said he’s “thrilled to death” with the deal.
“These people are very, very successful in real estate,” Shapiro said. Referring to Games, he added, “It’s in his blood, and he wants to redo what he did before. … They want to be the dominate force in Southern California real estate.”
HOM was founded in 2005 as a luxury home seller focusing on Orange County Riviera homes in Newport and Laguna Beach.
By 2007, however, as mortgage defaults were skyrockting, HOM was on the verge of bankruptcy, Shapiro said. He recapitalized the company and ended up running the firm as it grew from around $200 million in sales volume to about $2.1 billion last year. Pacific Sotheby’s had just over $4 billion in total sales last year, Games said.
After turning down multiple offers to buy the brokerage over the years, Shapiro said, he decided to sell to Pacific Sotheby’s about a year ago because he embraces their vision.
“I felt it was necessary to create what’s essentially the world’s biggest Sotheby’s,” Shapiro said. “The real estate business is consolidating. I think bigger is better.”
Shapiro, who in a previous career traded stocks as a Chicago “market maker, conceded that he never intended to run HOM.
“I’m not a real estate guy,” he said.
Agents are happy with the change, said Danielle Wilson, a HOM agent in Laguna Beach, who worked at California Prudential Realty in the early 2000’s.
“They’re a great team,” Wilson said Games and Jones-Church. “The know what it’s like to own a franchise and a brokerage and also to work for the agents.”
Games said his goal is to grow the combined company into a top 10 U.S. brokerage.
“We have the experience and the economy of scale to operate both companies and grow both companies,” Games said. “We’re very excited to see it coming together at this time.”
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