BAM Key Details:

  • At the Berkshire Hathaway annual shareholder meeting on Saturday, Warren Buffett and Greg Abel discussed the future of real estate agents after industry settlements. 
  • Greg Abel, Buffett’s successor, emphasized the agent’s role in guiding major investment decisions, despite HomeServices of America’s recent $250 million settlement.
  • Warren Buffett affirmed the value of agents, calling real estate a “fundamental business.” 

The mood at Berkshire Hathaway’s annual shareholder meeting on Saturday was bittersweet, as 93-year-old chairman and CEO Warren Buffett addressed both business matters and personal reflections. 

Buffett acknowledged the passing of his longtime partner, Charlie Munger, and, with a touch of humor, contemplated his own mortality. Amidst these more somber moments, he also reassured investors of the company’s succession plan, revealing that Greg Abel would oversee investment discussions. 

Fielding questions from shareholders, Buffett addressed several key topics, including:

  • Berkshire’s rationale behind selling some Apple stock 
  • The company’s loss on Paramount
  • Concerns about the potential misuse of artificial intelligence
  • Praise for Federal Reserve Chair Jerome Powell’s efforts in managing the economy

Buffett and Abel also discussed the role of real estate agents post-industry settlements—and that’s what we’ll focus on here. 

Tune in to today’s Hot Sheet for a full breakdown of remarks from Buffett and Abel, and keep reading for the highlights.

Warren Buffett and Greg Abel on Real Estate Industry Settlements and the Role of Agents

Sean Cawley, a real estate agent with HomeServices of America (a Berkshire Hathaway affiliate) and a shareholder who has attended the annual meeting for 15 straight years, asked Buffett’s thoughts on the settlement:

“Mr. Buffett, Home Services of America recently settled our class action lawsuit regarding commissions for $250 million last week. This dollar amounts about $100 million more than Keller Williams, $166.5 million more than Anywhere Real Estate…what are your thoughts on buying and selling a home in light of this recent settlement?

“And maybe ask the note to Greg and Ajit too— would you consider a Berkshire agent when buying your next home?”

Before turning the mic over to Abel, Buffett’s planned successor, Buffett joked, “I don’t buy ‘em (homes) that often, some people have noticed. But I certainly would consider it but I’d say the probability of that happening is low.” 

Greg Abel on the Importance of Real Estate Agents

Despite significant legal changes, including HomeServices of America’s $250 million settlement, Abel emphasized that real estate agents will continue to play a crucial role in the home-buying process, highlighting the importance of their counsel during major investment decisions.

In response to Cawley’s question, Abel stated:

“I think there’s a few questions in there. One, there’s no question the industry will go through some transitions because of that settlement. Ours and every other major player in the industry settled. The National Association of Realtors settled for more than $400 million. So effectively, everybody was swept up in that settlement. And it did set the grounds for both HomeServices and for the industry to move forward. 

“There’s a lot of changes that happen or are being proposed associated with that settlement. But the one thing that I think you hopefully would absolutely agree with, the real estate agent is still an important part of these transactions. It’s the one time in our lives where we make these massive investments and having that counseling guidance is critical. And that’s really what our business and those other businesses rely on. 

“How the commission structures change and how it’s negotiated, which is really what the settlement was, it was no longer that a buyer would automatically pay a commission agent to the selling agent, that now has to be negotiated. That’ll impact things but I think the Realtors will continue to be a very important part of that. And I think HomeServices in the industry will remain very relevant. 

“And then the only thing I would share with our shareholders on a broader basis is that obligation resides with HomeServices and can be met by HomeServices. And that was an important condition, because they were also pursuing Berkshire and Berkshire Hathaway Energy and we said you can pursue it separately, but that settlement will reside with HomeServices and be an obligation of that and they decided the ultimate settlement and we’ll go forward from there.”

On today’s Hot Sheet, host Byron Lazine noted the importance of these remarks—noting that Berkshire Hathaway sold its entire Paramount stake, yet still believes in the role of the real estate agent.

“The willingness to go ahead and back that ($250 million) settlement shows you that this isn’t just an empty statement from Greg Abel saying, ‘Hey, we think agents are critical.’ They put their money where their mouth is on that.”

Byron Lazine

Co-founder, BAM

Warren Buffett: Real Estate is “Fundamental”

Buffett added to the discussion, describing his company’s expansion into the real estate brokerage business as “fundamental,” despite expressing surprise at the legal decision leading to the settlements.

“I’ve sold two houses in the last 93 or fraction years, and I bought one that I shelled out, but I obviously bought the other, too. And I have not negotiated down the commission even though the last one sold for $7 million or something like that—people do negotiate down commissions to some extent. But I can tell you I’ve looked at the figures and I think the system has really worked out very well.”

“When I got out of school they had what they called FSBO (for sale by owner), and so I’ve been involved to some degree in watching the whole system operate. And I know what our average agent makes, I know how long they work on things (that) sometimes don’t materialize. I don’t think we’ll end up with a better system…it’s up to Greg and the people in HomeServices as we work through here. But I like our agency group and we’ve got a very large number of real estate agents, and I’ve encouraged the expansion we’ve done in the real estate agent, real estate brokerage business. No, it was just one or two operations when we bought Berkshire Hathaway Energy, and we really built up quite a company, and I think it’s a very fundamental business you need to help.”

A Notable Endorsement for the Real Estate Industry

In a clear endorsement of the real estate industry, Berkshire Hathaway’s leadership team, including Buffett, expressed strong belief in the continued importance of real estate agents. Despite the recent legal settlements impacting commission structures, Buffett and Abel acknowledged the crucial role agents play in guiding through major life decisions of buying or selling a home. 

Buffett, known for his business acumen and status as an investor, even called the industry a “fundamental business.” For real estate agents—these comments are a welcomed validation of their ongoing value. 

“That couldn’t be a more ringing endorsement, a more positive message for the real estate agents, the brokers, the community…from maybe the smartest investor of all time.”

Byron Lazine

Co-founder, BAM

Watch today’s Hot Sheet for more.