UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                Annual Report Pursuant to Section 13 or 15 (d) of
                       the Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 2000
                           Commission File No. 1-9874

                              HomeServices.Com Inc.
             (Exact name of registrant as specified in its charter)

        Delaware                                                41-1945806
-------------------------------                            --------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

6800 France Ave. South, Suite 600, Edina, Minnesota               55435
---------------------------------------------------          ----------------
(Address of principal executive offices)                        (Zip Code)

     Registrant's telephone number, including area code: (952) 928-5900
                                                         --------------

     Securities registered pursuant to Section 12(b) of the Act:

     Title of each class                           Name of exchange
     -------------------                          on which registered
     Common Stock, $0.01                          -------------------
     par value ("Common Stock")                   Nasdaq Stock Market


     Securities registered pursuant to Section 12(g) of the Act:  N/A

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days:

                                 Yes  X     No
                                    ----      ----

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

     Based on the closing sales price of Common Stock on the Nasdaq Stock Market
on March  23,  2001 the  aggregate  market  value of the  Common  Stock  held by
non-affiliates of the Company was $13,984,230.

     8,722,942 shares of Common Stock were outstanding on March 29, 2001

DOCUMENTS INCORPORATED BY REFERENCE

     Incorporated  by  reference  into this Form 10-K,  in  response to Items 10
through 13 of Part III, are the portions of the Company's  proxy statement dated
on or about April 16, 2001 for the Annual Meeting of  Shareholders to be held on
May 16, 2001 (the "Proxy Statement").



<PAGE>



                                TABLE OF CONTENTS
                                -----------------


PART I......................................................................3

Item 1.  Business...........................................................3
     General................................................................3
     Acquisition History....................................................4
     Mortgage Operations....................................................5
     Title, Escrow and Closing Services.....................................6
     Relocation Services....................................................6
     The Hook Up(TM)........................................................6
     The Fix Up(TM).........................................................7
     e-mortgages............................................................7
     Competition............................................................7
     Employees and Sales Associates.........................................8
     Regulation.............................................................8
Item 2. Properties..........................................................9
Item 3. Legal Proceedings...................................................9
Item 4. Submission of Matters to a Vote of Security Holders.................9

PART II....................................................................10

Item 5. Market for Registrant's Common Equity and Related Stockholder
     Matters...............................................................10
Item 6. Selected Financial Data............................................11
Item 7. Management's Discussion and Analysis of Financial Condition
     & Results of Operations..... .........................................11
     Results of Operations.................................................11
   Results of Operations of Homeservices.com
     for the Year Ended December 31, 2000..................................11
   Results of Operations of Homeservices.com
     for the Year Ended December 31, 1999..................................12
   Results of Operations of Homeservices.com
     for the Period From May 28, 1998 Through December 31, 1998............13
   Results of Operations of Predecessor
     for the Period From January 1, 1998 Through May 27, 1998..............14
   Liquidity and Capital Resources.........................................14
Item 7A. Quantitative and Qualitative Disclosures about Market Risk........15
Item 8. Financial Statements and Supplementary Data........................16
   Consolidated Balance Sheets.............................................16
   Consolidated Statements of Income.......................................17
   Consolidated Statements of Changes in Stockholders' Equity and
     Comprehensive Income..................................................18
   Consolidated Statements of Cash Flows...................................19
   Notes to Consolidated Financial Statements..............................20
   Report of Independent Accountants.......................................34
Item 9. Changes in and Disagreements With Accountants
   on Accounting and Financial Disclosure..................................35

PART III...................................................................36

Item 10.  Directors, Executive Officers and Key Employees..................36

PART IV....................................................................39

Item 14.Exhibits, Financial Statement Schedules and Reports on Form 8-K....39
   Valuation and Qualifying Accounts and Reserves..........................40
Signatures.................................................................41
Exhibit Index..............................................................43

<PAGE>

                                     PART I

ITEM 1. BUSINESS.

GENERAL

HomeServices.Com  Inc.  ("HomeServices"  or  "Company")  is the  second  largest
residential  real estate  brokerage firm in the United States based on aggregate
closed  transaction  sides  in 2000 for its  various  brokerage  firm  operating
subsidiaries.  Closed transaction sides mean either the buy side or sell side of
any closed home purchase and is the standard term used by industry  participants
and  publications to rank real estate  brokerage firms. In addition to providing
traditional residential real estate brokerage services, HomeServices cross sells
to its existing  real estate  customers  preclosing  services,  such as mortgage
origination and title services,  including title insurance, title search, escrow
and other  closing  administrative  services,  and  assists  in  securing  other
preclosing and  postclosing  services  provided by third  parties,  such as home
warranty, home inspection,  home security, property and casualty insurance, hook
up of utilities and related services,  home maintenance,  repair and remodeling.
HomeServices  currently operates primarily under the Edina Realty Home Services,
Iowa Realty,  J.C. Nichols  Residential,  CBSHOME,  Paul Semonin Realtors,  Long
Realty  Company and Champion  Realty Inc.  brand names in the  following  twelve
states:  Minnesota,  Iowa,  Arizona,  Kansas,  Missouri,   Kentucky,   Nebraska,
Wisconsin,  Indiana,  Maryland,  North  Dakota  and South  Dakota.  HomeServices
occupies the number one or number two market share position in each of its major
markets based on aggregate closed  transaction sides for the year ended December
31, 2000.  HomeServices'  major markets  consist of the  following  metropolitan
areas:  Minneapolis and St. Paul, Minnesota;  Des Moines, Iowa; Omaha, Nebraska;
Kansas City, Kansas; Louisville and Lexington, Kentucky; Springfield,  Missouri;
Tucson, Arizona and Annapolis, Maryland.

While HomeServices commenced operations in May 1998 with its acquisition of Iowa
Realty and Edina Realty, the real estate brokerage firms that currently comprise
HomeServices  collectively  manage 167 branch offices,  have approximately 6,600
sales associates and have operated for between 13 and 85 years,  with an average
operating  history  of  approximately  50  years  in our  major  markets.  Sales
associates  are not employees of  HomeServices,  but operate  under  independent
contractor agreements.

HomeServices is approximately  83% owned by MidAmerican  Energy Holdings Company
("MidAmerican  Holdings"),  a midwestern  utility holding company.  As a result,
MidAmerican  Holdings has the power to elect the entire  board of directors  and
approve  matters  submitted  to a vote  of  stockholders.  MidAmerican  Holdings
provides  certain  support  services  to  HomeServices,   including  management,
advisory,  legal, treasury,  employee benefit plan and insurance  administration
and  other  services,  pursuant  to a  services  agreement  which  is  on  terms
HomeServices  believes to be as  favorable  as it could obtain from an unrelated
third  party.  Under the  services  agreement,  HomeServices  is required to pay
MidAmerican  Holdings  a  monthly  fee  in  an  amount  equal  to  $50,000  plus
reimbursement for all reasonable  employee and out-of-pocket  costs and expenses
incurred by MidAmerican  Holdings in connection with providing these services to
HomeServices.   In  addition  to  the  services   agreement,   HomeServices  and
MidAmerican Holdings have entered into a registration rights agreement and a tax
indemnity  agreement.  As a holding  company,  HomeServices  conducts all of its
operations through its real estate brokerage and related services subsidiaries.

According to the National  Association  of  Realtors,  the median  length of the
homeownership  life cycle is seven years, which means that half of all homes are
owned by the same person for seven years or more and half of all homes are owned
by the same  person for less than seven  years.  This  homeownership  life cycle
includes the process of buying a home,  maintaining,  repairing,  remodeling the
home over the years, and eventually reselling and purchasing a new home. Of this
homeownership  life  cycle,  the  real  estate  broker's  relationship  with its
customer  during the  listing  process  and sale and  purchase  transaction  has
typically  lasted for 60-120 days.  According to a 2000 survey conducted for the
National  Association of Realtors,  75% of homebuyers  received  recommendations
from their real estate  sales  associate  about  providers  of other real estate
related  services and/or  products.  More than 90% of homebuyers who received at
least one recommendation  purchased at least one product and/or service based on
the  recommendation  given by the real estate sales associate.  The services and
products  recommended were mortgage lending,  title insurance,  home inspections
and home warranty for example.  Such  recommendations for ancillary products and
services  can be  valuable  for  homebuyers,  especially  since they are usually
preoccupied with other facets of the real estate transaction and could use sound
advice  from those with the  experience  and  know-how  that real  estate  sales
associates offer.

<PAGE>

HomeServices  provides many of the services that are considered by the survey to
be valuable for homebuyers.  HomeServices believes that the strong relationships
it develops  with its  customers  afford it a unique  opportunity  to expand its
business by maintaining and strengthening its customer relationships by offering
contacts for additional  basic home services  initiated at closing and a variety
of other  products  and  services  used after the  closing  of a home  purchase.
HomeServices receives advertising/sponsorship and referral service revenues from
the service providers under contracts  entered into with the service  providers.
HomeServices  believes  that  by  offering  these  additional  services  to  its
customers,  particularly  by means of  e-commerce,  it can assist its  customers
through  each  stage of the  average  seven-year  homeownership  life  cycle and
maintain its customers  throughout the  homeownership  life cycle.  HomeServices
believes  that the  customer  knowledge  that it gains  during  the sale  and/or
purchase process allows it to target its particular  services to the homebuyer's
specific needs.

The business of the Company is subject to various risks and uncertainties,  more
specifically  described in the  Company's  Form 8-K,  dated March 16, 2001.  The
Company's  Common  Stock is traded on the  Nasdaq  Stock  Market.  HomeServices'
principal  executive offices are located at 6800 France Avenue South, Suite 600,
Edina,  Minnesota 55435 and its telephone number is (952) 928-5900.  The Company
was incorporated in 1999 under the laws of the state of Delaware.

ACQUISITION HISTORY

HomeServices,  as successor by merger to MidAmerican  Realty  Services  Company,
entered the real estate brokerage  business in May 1998 by acquiring Iowa Realty
Co. Inc. and Edina Realty Home  Services of  Minnesota,  both  formerly  part of
AmerUs Home Services Inc.  HomeServices expanded its business with the purchases
in August 1998 of two  additional  established  real estate  brokerage  firms in
Omaha,  Nebraska,  HOME Real Estate  Holdings Inc. and CBS Real Estate  Company,
which were  merged to form  CBSHOME  Real Estate  Company.  In  September  1998,
HomeServices acquired J.C. Nichols Residential, Inc., a brokerage firm operating
in the  greater  Kansas  City area.  In  December  1998,  HomeServices  acquired
Nebraska Land Title & Abstract. In July 1999, HomeServices acquired Paul Semonin
Realtors,  a Louisville,  Kentucky real estate brokerage firm with operations in
Lexington,  Kentucky and southern Indiana. In August 1999, HomeServices acquired
Long Realty Company,  a Tucson,  Arizona real estate brokerage firm. In December
1999,  the Company  acquired  Champion  Realty  Inc.,  a real  estate  brokerage
operating in the Chesapeake Bay and eastern shore region of Maryland. In January
2001,  the Company  acquired the  residential  division of Tucson Realty & Trust
Company  and  combined  it with Long  Realty  Company  establishing  Long Realty
Company as the undisputed leader in the Tucson market.

HomeServices acts as a broker or agent in residential real estate  transactions.
In performing these  residential real estate services,  HomeServices  represents
either the seller, as the listing broker, or the buyer, as the buyer's agent, in
the sale.  When acting as a broker for the  seller,  HomeServices  provides  its
customers with the following services:

     *    assisting  the seller in pricing the  property  and  preparing  it for
          sale;

     *    marketing the property and showing it to the buyer;

     *    assisting the seller in negotiating the terms of the sale;

     *    ensuring that the  transaction  is in compliance  with any  applicable
          federal, state and local regulations; and

     *    closing the transaction.

<PAGE>

In exchange for providing these services as the seller's broker, the seller pays
HomeServices a commission upon the closing of the real estate transaction, which
is generally a fixed  percentage of the sales price.  Gross listing  commissions
typically  range from 5% to 7% of the sales price and may be shared  between the
seller's  broker and the buyer's  broker.  When acting as the  seller's  broker,
HomeServices enters into an exclusive agency relationship with the seller, which
means that  HomeServices  is  entitled  to receive a sales  commission  upon the
closing of the sale transaction  regardless of whether HomeServices,  the seller
or any other person locates the buyer.

When acting as a broker for the buyer,  HomeServices provides its customers with
the following services:

     *    assisting  the  buyer in  locating  properties  that come  within  the
          buyer's personal and financial specifications;

     *    showing properties to the buyer;

     *    assisting the buyer in negotiating the terms of the sale;

     *    monitoring  compliance  of the  transaction  and the property with any
          applicable federal, state and local regulations; and

     *    closing the transaction.

In exchange for providing  these  services as the buyer's  broker,  HomeServices
receives a commission  upon the closing of the real estate  transaction  that is
generally a fixed  percentage  of the  purchase  price.  With the consent of the
seller's  broker,  this commission is usually payable from the sales  commission
paid by the seller to the seller's broker.

In  transactions  in which  HomeServices is acting as a broker on either the buy
side or sell side of a transaction and a third-party  broker is acting as broker
on the other side of the transaction, HomeServices will in most instances, share
approximately  40 to 50% of the  sales  commission  with the  other  broker.  In
certain  circumstances,  and only with the consent of both the buyer and seller,
HomeServices  may act as the buyer's broker and the seller's  broker in the same
transaction.  HomeServices receives 100% of the sales commission in transactions
in which it acts as the sole broker.

Typically,   the  percentage  of  the  real  estate   commissions   received  by
HomeServices that is then paid to HomeServices' sales associates will vary based
on factors determined by HomeServices,  such as sales associate productivity and
rates  that are paid to  competing  associates  in the  same  local or  regional
market. The percentage of total commissions which HomeServices has paid to sales
associates has averaged approximately 69.1% over the past three years.

MORTGAGE OPERATIONS

HomeServices offers mortgage origination services,  primarily for loans in which
it acted as the broker in the home purchase  transaction.  Originations refer to
the general  process of arranging  mortgage  financing on behalf of the customer
for the  purchase of property or for the  refinancing  of an existing  mortgage.
HomeServices  currently  provides a  substantial  portion  of these  residential
mortgage  origination  services  through a joint  venture  with Wells Fargo Home
Mortgage  Inc.,  a  subsidiary  of Wells  Fargo & Company and one of the largest
mortgage  originators  in the  United  States.  Pursuant  to the joint  venture,
HomeServices  evaluates the mortgage  loans it originates  against  underwriting
standards  of  Wells  Fargo  Home  Mortgage.  The  joint  venture  employs  loan
originators and supervisory  staff and purchases  processing,  underwriting  and
closing  services  from Wells Fargo Home  Mortgage.  Under a services  agreement
between Wells Fargo Home Mortgage and the joint  venture,  Wells Fargo  Mortgage
provides  these  services and is  reimbursed  by the joint venture for the costs
incurred on comparable terms to those Wells Fargo Home Mortgage is reimbursed by
its own loan  production  offices.  Profits  earned by the joint  venture  after
payment of the amounts owed to Wells Fargo Home  Mortgage  which amount  varies,
and all other expenses are then divided per the joint venture  agreement between
HomeServices  and Wells Fargo Home  Mortgage.  Since  Wells Fargo Home  Mortgage
underwrites  and  services  the  mortgages,  HomeServices  retains  none  of the
servicing  responsibilities  or liabilities  for the mortgages it originates and
Wells Fargo Home  Mortgage  bears the losses from any failure by a mortgagor  to
pay principal, interest or other amounts under a mortgage.

In January 2001, HomeServices combined the mortgage originations business of its
wholly  owned  Kansas  City  subsidiary,   Plaza  Mortgage,  into  its  mortgage
origination joint venture with Wells Fargo Home Mortgage.  HomeServices  expects
that other of its mortgage  origination  subsidiaries  may be combined  with the
joint venture with Wells Fargo Home Mortgage at some future date.

<PAGE>

TITLE, ESCROW AND CLOSING SERVICES

In all  markets in which it operates  other than Iowa and  Kansas,  HomeServices
performs   abstracting,   examination,   search,   endorsements,    recordation,
preparation of title policy documents when acting as agent for Chicago Title and
other title insurance companies and closing  administrative  services as part of
its title services.  HomeServices acts as a title agent in such transactions and
does  not  underwrite  the  insurance.  Iowa is the  only  state  that  does not
authorize residential title insurance.  Instead, Iowa uses abstract companies to
provide the history  (abstract)  to lawyers for their  review and  warranty.  In
Iowa,  HomeServices  prepares  property  abstracts  for titles  for real  estate
agencies,  attorneys,  financial  institutions and other parties involved in the
selling or financing of real estate.  Kansas currently  significantly  restricts
residential  real  estate  brokers  from  also  performing   title   operations.
HomeServices  receives  fees  for  all of the  above  services  in  addition  to
retaining a substantial portion of title insurance premiums in states other than
Iowa and Kansas.

In addition, HomeServices owns an escrow services company which provides a range
of  real  estate  closing  services  to  home  buyers  and  sellers,   including
third-party  closings in which  HomeServices  is not otherwise  involved.  These
services include escrowing funds and processing closing documents. Revenues from
title, escrow and closing services are generated by transaction fees, which tend
to fluctuate with HomeServices' brokerage revenues.

RELOCATION SERVICES

HomeServices  offers  corporations a variety of specialized  services  primarily
concerned  with   facilitating  the   resettlement  of  transferred   employees.
HomeServices  believes that these  relocation  services  minimize the stress and
inconvenience   for  the  transferees   and  their  families  while   maximizing
cost-effectiveness  to the  corporations.  These relocation  services  generally
include   home-finding   assistance,    home-selling   assistance,    group-move
coordination,   inspection  services,   international   relocation   assistance,
cost-of-living   comparisons,   school  and  neighborhood  comparisons,   moving
services, mortgage services and expense management.

HomeServices  believes  that the  relocation  services it provides to  corporate
clients,  directly or indirectly through major third-party relocation companies,
enable it to develop long-standing  relationships with the transferred employees
themselves.   HomeServices   believes  that  these  transferred   employees  are
particularly in need of The Hook Up(TM) and The Fix Up(TM) services because they
most likely would be relocating to areas unfamiliar to them.

THE HOOK UP(TM)

HomeServices  believes  that it provides its  customers,  and  particularly  its
buy-side customers,  a broader and more comprehensive range of services than its
competitors  by  offering  The Hook  Up(TM) to the  customers.  The Hook  Up(TM)
program  arranges for the  disconnect and  reconnection  of basic home services
necessary   to  the  home  buyer.   HomeServices   believes  it  is   especially
well-positioned  to offer The Hook Up(TM) to its buy-side customers with whom it
has developed relationships during the home purchasing experience.

HomeServices offers third-party  products and services under the The Hook Up(TM)
program  through all of its  operating  companies.  These  products and services
include local and long distance  telephone  service,  Internet service and cable
television  service,  newspaper  delivery,  home  security,   including  monthly
monitoring,  home  warranty,  which is provided by the seller to the buyer as to
the  nonstructural  condition of the home,  such as the condition of the heating
and air conditioning  units, home inspection,  property and casualty  insurance,
electricity, natural gas, waste disposal, lawn service, moving and locksmith.

HomeServices  currently  provides  third-party  products  and  services  to  all
existing real estate customers  through  traditional  means and through The Hook
Up(TM) program by means of e-commerce.

HomeServices continues to evaluate the types of The Hook Up(TM) services that it
provides and opportunities for expansion. HomeServices receives revenues for the
services listed above from the service  providers  pursuant to contracts that it
has already entered into with the service providers.

<PAGE>

THE FIX UP(TM)

As part of  promoting a "one-stop  shopping"  experience  for its  customers  at
closing and throughout the typical seven-year homeownership cycle,  HomeServices
provides  its  existing  customers  and Internet  customers  generally,  through
e-commerce,  referrals  for home  maintenance,  repair  and  remodeling  related
products and services.  These  products and services are provided by third-party
providers.  HomeServices  believes  that The Fix  Up(TM)  services  assist a new
homeowner  through each stage of the  homeownership  cycle by simplifying  their
search  process for  third-party  service  providers.  HomeServices  screens and
monitors  these   third-party   service  providers  to  ensure  that  they  meet
pre-established  quality performance  standards,  although HomeServices does not
make any contractual  representations to customers as to the quality performance
of these providers or to guarantee their performance.  The third-party providers
offer  such  services  as  roofing,   siding,  decking,   remodeling,   windows,
landscaping, plumbing, electrical, heating, ventilation and air conditioning.

In  exchange  for   connecting   customers  to  these   third-party   providers,
HomeServices receives service fees from the actual third-party providers.

E-MORTGAGES

As a part of its e-commerce operations, HomeServices offers existing real estate
customers and other Internet  customers  generally the  opportunity to originate
and refinance  mortgages and home equity loans on-line.  HomeServices  currently
provides these mortgage  origination  services through its HomeServices  Lending
subsidiaries.

COMPETITION

The residential real estate brokerage  business  throughout the United States is
highly  competitive and is characterized  by many small  independent real estate
brokerage firms, a few major regional players,  and a multiregional  player, NRT
Incorporated.  Despite  the  fragmented  nature  of the  real  estate  brokerage
business, each of HomeServices' residential real estate brokerage firms commands
the number one or number two position in each of their respective major markets.
The  different  types of real estate  operations  include  independent  brokers,
franchises and company owned stores.

In the residential real estate  brokerage  business,  HomeServices'  real estate
brokerage  firms compete in their  existing  markets with regional  multi-office
independent  and  franchise  real estate  organizations  as well as local single
office  independent  real  estate  organizations.   HomeServices  also  competes
nationally with franchise real estate  organizations,  such as RE/MAX, GMAC, The
Prudential  and NRT  Incorporated,  which operates a number of offices under the
franchised  Century 21, ERA and Coldwell Banker brand names.  Companies  compete
for real estate brokerage  business  primarily on the basis of services offered,
reputation, personal contacts, and, to some degree, price.

In the real estate brokerage business, companies also compete to obtain the most
qualified  and  experienced  sales  associates.   Competition  for  these  sales
associates is based on commission fee rates,  services the company  offers,  its
reputation and personal contacts.

In its mortgage loan  origination  business,  HomeServices,  including the joint
venture  with  Wells  Fargo  Home   Mortgage,   competes  with  other   mortgage
originators,  such as mortgage  bankers,  state and national  banks,  and thrift
institutions,   some  of  which  have   substantially   greater  resources  than
HomeServices.  HomeServices  competes  for loan  origination  business  based on
services  offered,  price and available  terms and its ability to market through
its  sales and  marketing  services.  HomeServices  employs  full-time  mortgage
consultants who are assigned to various real estate brokerage  offices and title
offices. The mortgage  consultants  currently originate mortgage loans primarily
from HomeServices' real estate customers.  In the e-mortgage business,  which is
fragmented with no single dominant player,  HomeServices  will compete generally
with  other  mortgage   originators   providing   services  over  the  Internet.
HomeServices  believes it will have a  competitive  advantage  over these rivals
because they typically do not have a direct relationship with the customer.

In the The Hook Up(TM) and The Fix Up(TM) services,  HomeServices  will continue
to compete with other third-party services.  However, these competitors,  unlike
HomeServices, typically do not have a direct relationship with the customer.

<PAGE>

In the e-commerce business more generally,  HomeServices  competes with Internet
websites such as Realtor.com  and  Homestore.com  that provide access to similar
products or services.  HomeServices believes it has a competitive advantage over
these competitors because,  unlike  HomeServices,  these others are not licensed
real estate brokers and therefore,  typically do not have a direct  relationship
with the customer.

EMPLOYEES AND SALES ASSOCIATES

As of December 31, 2000,  HomeServices employed  approximately 1,600 individuals
and had approximately  6,600 sales associates,  who are independent  contractors
and not  employees.  None of  HomeServices'  employees  or sales  associates  is
covered  by  a  collective  bargaining   agreement.   Management  believes  that
HomeServices' relations with its employees and sales associates are good.

Sales  associates  are  not  employees  of   HomeServices,   but  operate  under
independent  contractor  agreements.  Each sales  associate signs an independent
contractor agreement with HomeServices that establishes the relationship between
the sales associate and HomeServices as that of an independent contractor rather
than employee and employer.  Under this agreement,  HomeServices agrees that the
sales associate may share with other sales  associates and sales  assistants the
use of HomeServices'  offices and facilities for the purposes of engaging in the
real estate brokerage business. The sales associate agrees to be responsible for
his or her  personal  business  expenses  and  payment of all state and  federal
income taxes and self-employment  taxes. The sales associate further agrees that
all listings  will remain the separate and exclusive  property of  HomeServices.
Either  HomeServices  or the  sales  associate  can  terminate  the  independent
contractor relationship at any time upon written notice given to the other.

As independent  contractors,  sales  associates are paid solely by commission on
the basis of closed sales  transactions  and do not receive a salary or benefits
from  HomeServices,  although they may have access to certain  benefits  through
HomeServices'  plans.  HomeServices  maintains  errors and  omissions  insurance
coverage, referred to herein as E&O insurance, for each of its sales associates.
Some of  HomeServices'  real estate brokerage  subsidiaries  require their sales
associates to contribute towards the maintenance of such E&O insurance.

HomeServices  is dedicated  to the  recruitment,  training and  retention of its
sales associates.  HomeServices provides extensive training programs for its new
and experienced  sales  associates aimed at improving their marketing skills and
increasing  their  knowledge and awareness of the issues and laws  affecting the
real estate  industry  and their  productivity.  New sales  associates  attend a
four-week  training  program which  prepares them for entry into the real estate
brokerage industry.  Additional training is provided after sales associates have
worked in the field.  Finally,  more seasoned sales associates have access to an
eight-week   program  which  is   structured  to  improve  their   business  and
professional skills.

REGULATION

Real estate  brokerage is regulated at both the state and federal  levels in the
United  States.   HomeServices'  real  estate  brokerage  firms  and  all  sales
associates are licensed by their  respective state  regulatory  agencies.  State
statutes  contain general  standards for and prohibitions on the conduct of real
estate brokers and sales  associates and set standards in disclosure when acting
in an agency and dual agency capacity  (i.e.,  representing a seller and a buyer
in a transaction), collecting commissions, continuing broker and sales associate
education,  administering trust funds, advertising and disclosing information in
real estate forms.

Under state law, each of HomeServices'  realty companies has a duty to supervise
and is responsible for the conduct of its sales  associates.  The states enforce
their  regulatory  authority  by  responding  to  consumer  complaints  and,  if
appropriate,  by taking action  against the  licensee.  The action may include a
warning letter or reprimand,  a temporary  suspension of license or a revocation
of license with fines imposed.  Each of HomeServices'  licensed realty companies
strives to avert  regulatory  complaints by educating its sales associates about
state regulations with established  training  programs.  HomeServices'  in-house
legal  department  takes  primary  responsibility  for handling  any  regulatory
complaints  received by the realty  companies  concerning  their  operations and
sales  associates.  HomeServices  believes that to date,  none of the regulatory
complaints  received by the realty  companies have been material.  Further,  the
majority of those  complaints have not resulted in any action being taken by the
regulatory authority.  There are currently no regulatory investigations that, if
found to merit regulatory action, would adversely affect  HomeServices'  ability
to conduct business.

<PAGE>

On the federal level, HomeServices' real estate brokerage activities are subject
to the Real Estate  Settlement  Procedures Act and the  regulations  promulgated
thereunder which prohibit  discrimination  and require the disclosure of certain
information to borrowers concerning settlement costs.

HomeServices  mortgage loan  organization  activities are subject on the federal
level to the Real Estate Settlement Procedures Act, the Equal Credit Opportunity
Act, the Federal Truth-in-Lending Act and the regulations promulgated thereunder
which prohibit  discrimination and require the disclosure of certain information
to borrowers  concerning  credit and settlement costs. As an approved Fannie Mae
and Federal Home Loan Mortgage  Corporation  mortgage  seller,  HomeServices  is
required to comply with Fannie Mae and Federal  Home Loan  Mortgage  Corporation
seller  guidelines  for  secondary  sale of mortgages.  Additionally,  there are
various  state  laws  affecting  HomeServices'  mortgage  operations,  including
licensing requirements and substantive limitations on the interest and fees that
may be charged.  States also have the right to conduct  financial and regulatory
audits  of  the  loans  under  their  jurisdiction.  HomeServices,  through  its
subsidiaries,  is  licensed  to provide  mortgage  origination  services  in the
jurisdictions in which it operates.

HomeServices' title services are regulated by state regulatory  authorities that
possess broad powers relating to the granting and revocation of licenses.  These
state authorities also regulate insurance rates and the form of policies.

HomeServices'  business depends on the validity of, and HomeServices'  continued
good  standing  under,  the licenses and  approvals  under which it operates and
HomeServices'  continued  compliance  with pertinent  regulations.  HomeServices
therefore devotes a significant amount of effort toward maintaining its licenses
and ensuring  compliance  with  applicable  regulations,  which efforts  include
maintaining a staff of in-house compliance officers.

ITEM 2. PROPERTIES.

HomeServices'  principal  offices  are  located  in  Edina,   Minnesota,   where
HomeServices leases approximately 50,000 square feet of office space. This lease
expires in 2003. The rent under this lease is  approximately  $650,000 per year.
In addition,  HomeServices has a total of 167 branch offices,  substantially all
of which are leased.  HomeServices'  office leases  generally have initial terms
ranging  from  three to ten  years,  with an  option  to  extend  the  lease for
additional  periods.  The leases are  typically  net  leases,  which  means that
HomeServices  is required to pay  property  taxes,  utilities  and  maintenance.
HomeServices  believes that its present  facilities are adequate for its current
level of operations.

ITEM 3. LEGAL PROCEEDINGS.

In the  ordinary  course of  business,  HomeServices  and its  subsidiaries  are
involved in legal proceedings  incidental to their operations.  HomeServices and
its  subsidiaries  are not  currently  involved  in any legal  proceedings  that
management  believes  would have a material  adverse effect on the operations or
financial condition of HomeServices.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None


<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Common Stock is listed on the Nasdaq Stock Exchange under the symbol "HMSV."

PERIOD                                         HIGH                 LOW
------                                       --------             --------

For year ended December 31, 2000
  Quarter ended March 31, 2000               $15.1250             $ 8.6250
  Quarter ended June 30, 2000                $11.6250             $ 8.0000
  Quarter ended September 30, 2000           $11.5625             $11.2500
  Quarter ended December 31, 2000            $11.5000             $10.0000

  Quarter ended December 31, 1999            $16.5000             $14.5000


As of March 23,  2001,  there were  approximately  214  holders of record of the
Common Stock.

HomeServices  did not pay any cash  dividends  on its Common  Stock during 2000,
1999 or 1998.  The  Company's  present  policy is to  reinvest  earnings  in the
Company and pay no dividends on its Common Stock.

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

The following table presents selected consolidated financial data of the Company
as of and for the years ended  December 31, 2000 and 1999 and the periods  ended
December  31,  1998 and May 27,  1998  (dollars  in  thousands  except per share
amounts).
<TABLE>
<CAPTION>

                                                                  Company                          Predecessor
                                                ---------------------------------------------    ---------------
                                                                                 May 28, 1998    January 1, 1998
                                                 Year Ended     Year Ended         Through           Through
                                                December 31,    December 31,     December 31,        May 27,
                                                    2000            1999            1998              1998
                                                ------------    ------------     ------------    ---------------
<S>                                                <C>             <C>             <C>             <C>
STATEMENT OF INCOME DATA:
Revenues:
Commission revenue...........................      $ 426,727       $ 355,124       $ 169,647       $ 74,893
Title fees ..................................         21,936          21,313          14,154          7,575
Other .......................................         22,030          16,854           6,790          3,769
                                                   ---------       ---------       ---------       --------
Total Revenues ..............................        470,693         393,291         190,591         86,237
                                                   ---------       ---------       ---------       --------

Operating expenses:
Commission expense ..........................        300,323         246,475         113,225         49,107
All other operating expenses ................        131,062         118,042          59,265         31,126
Amortization of pending real estate contracts            665           3,088          18,271             --
Depreciation and amortization ...............         10,912           8,881           4,177          2,293
                                                   ---------       ---------       ---------       --------
Total operating expenses.....................        442,962         376,486         194,938         82,526
                                                   ---------       ---------       ---------       --------

Total other income (expense), net ...........         (1,645)         (3,128)         (1,334)           (94)

Income (loss) before income taxes ...........         26,086          13,677          (5,681)         3,617
Income tax expense (benefit) ................         10,308           6,025          (2,247)         1,664
                                                   ---------       ---------       ---------       --------
Net income (loss) ...........................      $  15,778       $   7,652       $  (3,434)      $  1,953
                                                   =========       =========       =========       ========
Net income (loss) per share:
Basic........................................      $    1.69       $    0.96       $   (0.51)      $   0.41
                                                   =========       =========       =========       ========
Diluted .....................................      $    1.54       $    0.96       $   (0.51)      $   0.41
                                                   =========       =========       =========       ========
</TABLE>
<TABLE>
<CAPTION>

                                                December 31,    December 31,    December 31,
BALANCE SHEET DATA:                                 2000            1999            1998
                                                ------------    ------------    ------------
<S>                                                <C>             <C>             <C>
Cash and cash equivalents...............           $   5,825       $  10,318       $   3,114
Total assets............................           $ 169,470       $ 168,843       $ 128,520
Long term debt including current portion           $  47,404       $  48,817       $  61,445
Stockholders' Equity....................           $  80,636       $  82,352       $  35,194
</TABLE>

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

RESULTS OF OPERATIONS
Results of operations of the Company are significantly  influenced by the timing
of when  entities are acquired.  The results of operations  reflect the revenues
and expenses of each of the entities from their respective dates of acquisition.

The Company's real estate  brokerage  business being  concentrated  in the upper
Midwest is subject to seasonal fluctuations. More home sale transactions tend to
close  during  the  second  and third  quarters  of the year.  As a result,  the
Company's  operating results and  profitability  are historically  higher in the
second and third quarters relative to the remainder of the year.

RESULTS OF OPERATIONS OF HOMESERVICES.COM FOR THE YEAR ENDED DECEMBER 31, 2000
Revenues.  Total  revenues  for the year ended  December  31,  2000 were  $470.7
million. Commission revenue totaling $426.7 million accounted for 90.7% of total
revenues  and title fees  totaling  $21.9  million  accounted  for 4.7% of total
revenues.  Commission  revenue  increased  $71.6 million in 2000  primarily as a
result of companies acquired in the latter part of 1999. Other revenues totaling
$22.0  million  accounted  for 4.6% of total  revenues and  included  escrow and
closing revenue, mortgage origination fee income, franchise fees, relocation and
service-provider generated revenue and various other revenues.

<PAGE>

Commission  Expense.  Commission  expense  totaled  $300.3  million  or 70.4% of
commission revenue for the year ended December 31, 2000. Commission expense as a
percentage of commission revenue will vary due to sales associate  productivity,
seasonality and pay scales at the various subsidiaries.

Amortization  of Pending Real Estate Sales  Contracts.  Upon  acquiring the real
estate brokerage  companies,  the Company  establishes an asset for the value of
pending real estate sales  contracts.  The unamortized  value as of December 31,
1999 of these acquired contracts for acquisitions prior to 2000 was $0.7 million
which was fully amortized to expense in the year ended December 31, 2000.

Depreciation and Amortization.  Depreciation and amortization for the year ended
December 31, 2000 totaled $10.9 million,  excluding the  amortization of pending
real estate sales contracts. Depreciation and amortization in 2000 included $1.1
million of incremental goodwill amortization related to business acquisitions.

All Other Operating  Expenses.  All other operating  expenses for the year ended
December 31, 2000 totaled $131.1 million.  All other operating expenses included
salaries  and employee  benefits of $64.4  million,  occupancy  expense of $22.4
million,  business promotion and advertising expense of $18.9 million, and other
operating expenses of $25.3 million.

Other Income  (Expense),  Net.  Other income  (expense),  net for the year ended
December 31, 2000 consisted of interest income and expense.  Interest income and
expense for the year ended  December 31, 2000 was $1.5 million and $3.2 million,
respectively.  Lower  interest  expense in 2000 was  primarily  related to lower
borrowings relative to 1999.

Income Tax Expense  (Benefit).  The effective income tax rate for the year ended
December  31, 2000 was 39.5%.  The lower  effective  tax rate in 2000 was due to
state book to tax adjustments.

Net Income.  Net income for the year ended  December 31, 2000 was $15.8 million,
reflecting  operations  of the  entities  acquired  in 1999 for the full year in
2000.

Earnings Before Interest,  Taxes, Depreciation and Amortization (EBITDA) for the
twelve months ended December 31, 2000 is $39.3 million. EBITDA is defined as net
income (loss) before income  taxes,  interest and other income  (expense),  net,
plus depreciation and amortization and amortization of pending real estate sales
contracts.

RESULTS OF OPERATIONS OF HOMESERVICES.COM FOR THE YEAR ENDED DECEMBER 31, 1999
Revenues.  Total  revenues  for the year ended  December  31,  1999 were  $393.3
million. Commission revenue totaling $355.1 million accounted for 90.3% of total
revenues  and title fees  totaling  $21.3  million  accounted  for 5.4% of total
revenues.  Title fee revenue is affected by the number of brokerage  refinancing
transactions. The number of brokerage refinancing transactions during the period
was unfavorably  affected by interest rate increases in the latter half of 1999.
Other revenues  totaling $16.9 million  accounted for 4.3% of total revenues and
included escrow and closing revenue,  mortgage origination fee income, franchise
fees,  relocation  and  service-provider  generated  revenue and  various  other
revenues.

Commission  Expense.  Commission  expense  totaled  $246.5  million  or 69.4% of
commission revenue for the year ended December 31, 1999. Commission expense as a
percentage of commission revenue will vary due to sales associate  productivity,
seasonality and pay scales at the various subsidiaries.

Amortization  of Pending Real Estate Sales  Contracts.  Upon  acquiring the real
estate brokerage  companies,  the Company  establishes an asset for the value of
pending real estate sales contracts.  The value of these acquired  contracts for
the 1999  acquisitions  was $3.8 million of which $3.1 million was  amortized to
expense in the year ended December 31, 1999.

Depreciation and Amortization.  Depreciation and amortization for the year ended
December 31, 1999 totaled $8.9 million,  excluding the  amortization  of pending
real estate sales contracts. Depreciation and amortization in 1999 included $0.4
million of goodwill amortization related to business acquisitions.

<PAGE>

All Other Operating  Expenses.  All other operating  expenses for the year ended
December 31, 1999 totaled $118.0 million.  All other operating expenses included
salaries  and employee  benefits of $58.1  million,  occupancy  expense of $19.2
million,  business promotion and advertising expense of $16.5 million, and other
operating expenses of $24.2 million.  Included in salaries and employee benefits
for the year ended December 31, 1999 was a one time pre-tax and non-cash  charge
of $3.6 million  related to options  granted in  connection  with the  Company's
initial public  offering (IPO) in October 1999. Also included in other operating
expenses is additional  occupancy and start-up costs due to the expansion of the
title business in Omaha and  telecommunications,  offices  supplies,  management
fees, and corporate charges for services provided by MidAmerican Holdings.

Other Income  (Expense),  Net.  Other income  (expense),  net for the year ended
December 31, 1999 consisted primarily of interest expense.  Interest expense for
the year ended  December  31, 1999 was $4.1  million.  Interest  expense in 1999
reflected  a full  year of  interest  related  to  debt  used  to  finance  1998
acquisitions. Initial financing was obtained through borrowings from MidAmerican
Holdings.  In the fourth quarter of 1998,  these borrowings were refinanced with
the  proceeds  of  $35.0  million  private  placement  7.12%  senior  notes  and
borrowings  of $25.0 million under a revolving  credit  facility.  An additional
$8.0 million of debt was borrowed by the Company  from  MidAmerican  Holdings in
August 1999 to finance the  acquisition  of Long Realty  Company.  In  September
1999, the Company replaced the $25 million  revolving credit facility with a $75
million facility.  In October 1999, the Company repaid the MidAmerican  Holdings
and revolving credit facility loans with proceeds from the IPO and cash on hand.
In  December  1999,  the  revolving  credit  facility  was used by the  Company,
together with other funds, to finance the acquisition of Champion Realty Inc..

Income Tax Expense  (Benefit).  The effective income tax rate for the year ended
December 31, 1999 was 44.1% which is higher than the  Company's  statutory  rate
due to the effective  state tax rate,  along with permanent tax  differences for
certain goodwill amortization and other non-deductible expenses.

Net Income.  Net income for the year ended  December 31, 1999 was $7.7  million,
reflecting operations of the entities acquired in 1998 for the full year in 1999
and Paul Semonin  Realtors,  Long Realty Company,  and Champion Realty Inc. from
the dates of acquisition through December 31, 1999.

EBITDA for the twelve months ended December 31, 1999 is $28.8 million.

RESULTS OF  OPERATIONS  OF  HOMESERVICES.COM  FOR THE PERIOD  FROM MAY 28,  1998
THROUGH DECEMBER 31, 1998
The results of operations  for this period reflect the operations of Iowa Realty
and Edina Realty and their subsidiaries for the entire period. They also include
the results of operations for the  non-predecessor  entities acquired from their
dates of acquisition through December 31, 1998.

Revenues. Total revenues for the period were $190.6 million.  Commission revenue
from the real estate brokerage  operations was $169.6 million, or 89.0% of total
revenues.  Title  fees  for the  period  were  $14.2  million,  or 7.4% of total
revenues.  The amount of title fees is affected by the number of  brokerage  and
refinancing  transactions.  The number of  refinancing  transactions  during the
period was  favorably  affected  by interest  rates.  Other  revenues  were $6.8
million, or 3.6% of total revenues.

Commission Expense. Commission expense from the real estate brokerage operations
was $113.2 million, or 66.7% of commission revenue.

Amortization  of Pending Real Estate Sales  Contracts.  Upon  acquiring the real
estate brokerage  companies,  the Company  establishes an asset for the value of
pending real estate sales contracts.  The value of these acquired  contracts for
the 1998 acquisitions was $18.3 million, which was fully amortized to expense in
the year ended December 31, 1998.

Depreciation and Amortization.  Depreciation and amortization for the period was
$4.2 million,  of which $1.3 million was the amortization of goodwill related to
the 1998 business acquisitions.

All Other  Operating  Expenses.  All other  operating  expenses  for the  period
totaled $59.3 million, or 31.1% of total revenues.  All other operating expenses
included  salaries and employee  benefits of $27.6 million,  occupancy  costs of
$9.1 million,  business  promotion and advertising  expenses of $8.6 million and
other operating costs of $14.0 million.  Although the overall  operations of the
entities acquired by the Company continued  basically the same as prior to their
acquisition,  the period  reflects  costs related to the  acquisitions,  such as
changing signage and other transition costs.

<PAGE>

Other Income (Expense),  Net. Other income (expense), net consisted primarily of
interest expense,  totaling $1.9 million. Initial financing for the acquisitions
was obtained through borrowings from MidAmerican Holdings. In the fourth quarter
of 1998,  most of those  borrowings  were  refinanced with the proceeds of $35.0
million in private  placement 7.12% senior notes and borrowings of $25.0 million
under a revolving credit facility.

Income Tax Expense (Benefit). The effective income tax rate for the period was a
benefit  of 39.6%  which  is lower  than  the  Company's  statutory  rate due to
permanent  tax  differences  for  certain   goodwill   amortization   and  other
non-deductible expenses.

Net Income  (Loss).  The  Company's  net loss for the period from May 28,  1998,
through December 31, 1998, was $3.4 million.

EBITDA.  EBITDA for the period of May 28, 1998 through December 31, 1998 was
$18.1 million.

RESULTS OF OPERATIONS OF PREDECESSOR FOR THE PERIOD FROM JANUARY 1, 1998 THROUGH
MAY 27, 1998
The results of operations  for this period reflect the operations of Iowa Realty
and Edina Realty and their subsidiaries for the entire period.  Iowa Realty sold
HOME Realty on May 7, 1998. Accordingly, HOME Realty's results of operations are
not included for the period following the sale.

Revenues.  Total revenues for the period were $86.2 million.  Commission revenue
from the real estate brokerage  operations was $74.8 million,  or 86.8% of total
revenues.  Title  fees  for the  period  were  $7.6  million,  or 8.8% of  total
revenues. Other revenues were $3.8 million, or 4.4% of total revenues.

Commission Expense. Commission expense from the real estate brokerage operations
was $49.1 million, or 65.6% of commission revenue.

Depreciation and Amortization.  Depreciation and amortization for the period was
$2.3  million,  of which  $0.8  million  was the  amortization  of  intangibles,
including goodwill related to acquisitions.

All Other  Operating  Expenses.  All other  operating  expenses  for the  period
totaled $31.1 million, or 36.1% of total revenues.  All other operating expenses
included  salaries and employee  benefits of $14.5 million,  occupancy  costs of
$5.6 million,  business  promotion and advertising  expenses of $5.2 million and
other operating costs of $5.8 million.

Income Taxes (Benefit). The effective tax rate for the period was 46.0% which is
higher than the  predecessor's  statutory rate due to permanent tax  differences
for certain goodwill amortization and other non-deductible expenses.

Net Income (Loss).  The  predecessor's net income for the period from January 1,
1998, through May 27, 1998, was $2.0 million.

EBITDA.  EBITDA for the period of January 1, 1998 through May 27, 1998 was
$6.0 million.

LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements consist primarily of working capital, capital
expenditures and acquisitions.  Historically, the Company has funded its working
capital  and  capital  expenditures  using  cash and cash  equivalents  on hand.
Acquisitions  have  historically  been financed  through the  Company's  initial
public stock  offering,  borrowings  under its revolving  credit  facility,  the
private  placement of the 7.12% senior notes,  loans from MidAmerican  Holdings,
capital  contributions and cash on hand. The Company's cash and cash equivalents
totaled  $5.8  million  and  $10.3  million  at  December  31,  2000  and  1999,
respectively.

The Company's cash provided by operating  activities was $24.1 million and $33.1
million  for the year  ended  December  31,  2000 and  1999,  respectively.  The
decrease in 2000 is due primarily to a change in mortgage loans held for sale.

The  Company's  cash used in  investing  activities  was $9.3  million and $46.6
million  for the year  ended  December  31,  2000 and  1999,  respectively.  The
Company's  cash  used in  investing  activities  for the  year  ended  2000  was
primarily  as a  result  of  $8.4  million  of  office  property  and  equipment
purchases.  The Company's  cash used in investing  activities for the year ended
1999 was  primarily as a result of the  acquisitions  of Paul Semonin  Realtors,
Long Realty Company,  and Champion Realty Inc. for a combined $36.8 million, net
of cash and cash equivalents acquired.

<PAGE>

The Company's  cash (used in) provided by financing  activities  was ($19.2) and
$20.7 million for the year ended December 31, 2000 and 1999,  respectively.  The
Company's  cash  used in  financing  activities  for the  year  ended  2000  was
primarily a result of the  Company's  purchase of 1,700,000  of its  outstanding
common  stock at a price of $10.50 per share.  The  Company's  cash  provided by
financing  activities for the year ended 1999 was primarily a result of proceeds
from the  issuance  of  common  stock  through  a public  offering  and  capital
contributions.

In May  1998,  HomeServices  entered  into a  revolving  credit  agreement  with
MidAmerican Holdings to borrow funds from time to time, primarily to support the
acquisitions.  As of December 31, 2000 and 1999,  there were no borrowings under
this  agreement.  The interest  rate on  borrowings is equal to the 30-day LIBOR
rate plus 1% (7.6% on December 31, 2000). On June 24, 1999, the revolving credit
agreement with MidAmerican Holdings was amended to reduce MidAmerican  Holdings'
total  commitment  and the Company's  borrowing  capacity  thereunder  from $100
million to $10 million.

In November 1998, the Company obtained a $25 million, five-year revolving credit
facility.  On  September  20, 1999,  the Company  entered into a new $75 million
senior secured  revolving  credit agreement which replaced the then existing $25
million revolving credit facility. The senior secured revolving credit agreement
has a term of three years and is secured by a pledge of the capital stock of all
of the existing and future  subsidiaries  of the  Company.  Amounts  outstanding
under this revolving credit facility bear interest,  at the Company's option, at
either the prime  lending  rate or LIBOR plus a fixed  spread of 1.25% to 2.50%,
which varies based on the Company's cash flow leverage ratio. As of December 31,
2000,  the  blended  average  interest  rate on the  revolving  credit  facility
borrowings of $10 million was 7.3%.

In  October  2000,  the  Company  obtained  a waiver of the  restricted  payment
provisions  under its $75 million  senior  secured  revolving  credit  agreement
related to the Company's  purchase of 1,700,000 of its outstanding  common stock
and agreed to reduce the amount of such  facility to $65  million to  facilitate
the purchase.

The Company believes that the cash flow from operations and available borrowings
under its  revolving  credit  facility  will be  adequate  to meet its needs for
working capital,  capital expenditures,  debt service,  planned acquisitions and
the  continued   development  of  its  e-commerce  platform.   However,   future
acquisition  growth may  result in the need to raise  additional  funds  through
public or private financings or the formation of strategic ventures.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The  Company is subject to changes in  interest  rates  which  could  negatively
impact its business. The Company's fixed rate long-term debt does not expose the
Company to the risk of earnings loss from increased interest expense as a result
of changes in the market  interest  rate.  The Company has managed its  interest
rate  risk for its  variable  rate  debt by  entering  into  interest  rate swap
agreements which provide for payment of a fixed rate of interest and the receipt
of a variable rate indexed to LIBOR.  The nominal amount of such swaps was $12.5
million as of December  31, 2000 and 1999,  respectively.  The fair value of the
interest rate swap at December 31, 2000 was $136,000. Assuming a 10% increase in
interest rates, the fair value of the swap agreement would have been $162,000 at
December 31, 2000. In the future,  the Company may continue  using interest rate
swaps to reduce risk on the variable debt or, when appropriate,  may replace the
variable rate debt with fixed rate debt.

<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


                              HOMESERVICES.COM INC.
                           CONSOLIDATED BALANCE SHEETS
           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

                                                           as of December 31,
                                                         ----------------------
                                                            2000        1999
                                                         ----------   ---------
ASSETS
Current Assets:
---------------
Cash and cash equivalents .............................. $   5,825    $  10,318
Commissions and other trade receivables,
  net of allowance of $386 and $1,332 ..................     8,856        7,089
Mortgage loans held for sale ...........................     5,548        2,974
Pending real estate sales contracts ....................        --          673
Amounts held in trust ..................................    13,141        8,734
Income taxes receivable ................................       731          534
Deferred income taxes ..................................     1,081        1,571
Other current assets ...................................     3,875        3,224
                                                         ---------    ---------
     Total current assets ..............................    39,057       35,117
                                                         ---------    ---------

Other Assets:
-------------
Office property and equipment, net .....................    23,792       22,943
Intangible assets, net .................................   102,613      106,056
Deferred income taxes ..................................        --        1,108
Other assets ...........................................     4,008        3,619
                                                         ---------    ---------
     Total other assets ................................   130,413      133,726
                                                         ---------    ---------

TOTAL ASSETS ........................................... $ 169,470    $ 168,843
                                                         =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
--------------------
Accounts and commissions payable ....................... $   9,045    $   7,172
Accrued expenses .......................................    10,940       12,853
Payable to affiliates ..................................       215          857
Cash held in trust .....................................    13,141        8,734
Current portion of long-term debt ......................       742          707
Other current liabilities ..............................     1,606        1,945
                                                         ---------    ---------
     Total current liabilities .........................    35,689       32,268
                                                         ---------    ---------

Other Liabilities:
------------------
Long-term debt .........................................    46,662       48,110
Agent profit-sharing ...................................     6,168        5,775
Deferred income taxes ..................................        21           --
Other noncurrent liabilities ...........................       294          338
                                                         ---------    ---------
     Total other liabilities ...........................    53,145       54,223
                                                         ---------    ---------
     Total liabilities .................................    88,834       86,491
                                                         ---------    ---------
Commitments and contingencies (Note 14)
Stockholders' Equity:
---------------------
Convertible preferred stock, $0.01 par value,
  2,000,000 shares authorized; no shares
  issued at December 31, 2000 and 1999 .................        --           --
Common stock, $0.01 par value, 38,000,000 shares
  authorized; 10,422,942 shares issued at
  December 31, 2000 and 1999 ...........................       104          104
Additional paid-in capital .............................    78,705       78,705
Notes receivable from shareholders .....................      (317)        (651)
Accumulated other comprehensive loss ...................        (2)         (24)
Retained earnings ......................................    19,996        4,218
Less: Treasury stock, 1,700,000 common shares
  at December 31, 2000, at cost ........................   (17,850)          --
                                                         ---------    ---------
     Total stockholders' equity
                                                            80,636       82,352
                                                         ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............. $ 169,470    $ 168,843
                                                         =========    =========

   The accompanying notes are an integral part of these financial statements.

<PAGE>
                              HOMESERVICES.COM INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                             Company                     Predecessor
                                             ----------------------------------------  ---------------
                                                                         May 28, 1998  January 1, 1998
                                             Year Ended     Year Ended    Through          Through
                                             December 31,  December 31,  December 31,      May 27,
                                                 2000         1999         1998             1998
                                             ------------  ------------  ------------  ---------------
<S>                                             <C>          <C>          <C>             <C>
Revenues:
Commission revenue...........................   $ 426,727    $ 355,124    $ 169,647       $ 74,893
Title fees ..................................      21,936       21,313       14,154          7,575
Other .......................................      22,030       16,854        6,790          3,769
                                                ---------    ---------    ---------       --------
Total revenues ..............................     470,693      393,291      190,591         86,237

Operating expenses:
Commission expense ..........................     300,323      246,475      113,225         49,107
Salaries and employee benefits ..............      64,406       58,075       27,603         14,620
Occupancy ...................................      22,384       19,189        9,081          5,564
Business promotion and advertising ..........      18,926       16,543        8,632          5,184
Other operating expenses ....................      25,346       24,235       13,949          5,758
Amortization of pending real estate contracts         665        3,088       18,271             --
Depreciation and amortization ...............      10,912        8,881        4,177          2,293
                                                ---------    ---------    ---------       --------
Total operating expenses: ...................     442,962      376,486      194,938         82,526

Other Income (expense):
Interest income .............................       1,543        1,006          595           169
Interest expense ............................      (3,188)      (4,134)      (1,929)         (263)
                                                ---------    ---------    ---------      --------
Total other income (expense), net ...........      (1,645)      (3,128)      (1,334)          (94)

Income (loss) before income taxes ...........      26,086       13,677       (5,681)        3,617

Income tax expense (benefit) ................      10,308        6,025       (2,247)        1,664
                                                ---------    ---------    ---------      --------

Net income (loss) ...........................   $  15,778    $   7,652    $  (3,434)     $  1,953
                                                =========    =========    =========      ========

Net income (loss) per share:
Basic .......................................   $    1.69    $    0.96    $   (0.51)     $   0.41
                                                =========    =========    =========      ========
Diluted .....................................   $    1.54    $    0.96    $   (0.51)     $   0.41
                                                =========    =========    =========      ========

Weighted average shares outstanding - Basic .       9,335        7,956        6,779         4,748
                                                =========    =========    =========      ========

Weighted average shares outstanding --Diluted      10,218        8,012        6,779         4,748
                                                =========    =========    =========      ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

<PAGE>
                              HOMESERVICES.COM INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                                                       ACCUMULATED
                               PREFERRED                                   NOTES          OTHER       RETAINED
                                 STOCK     COMMON STOCK    ADDITIONAL   RECEIVABLE    COMPREHENSIVE  EARNINGS
                               --------- -----------------  PAID-IN       FROM           INCOME     (ACCUMULATED  TREASURY
                                SHARES     SHARES   AMOUNT  CAPITAL    SHAREHOLDERS      (LOSS)       DEFICIT)     STOCK    TOTAL
                               --------- ---------  ------ ----------  ------------  -------------  ------------  --------  -------

<S>                               <C>    <C>          <C>    <C>         <C>             <C>          <C>          <C>      <C>
Predecessor:
Balance, January 1, 1998 .....       -    4,758,850   $ 47   $31,665     $     -         $     -        $5,079     $     -  $36,791
Net income ...................                                                                           1,953                1,953
Distribution to parent .......                                                                          (1,961)              (1,961)
Share acquisition ............              (64,692)    (1)     (699)                                                          (700)
Dividends ....................                                                                          (3,699)              (3,699)
Capital contribution .........                                 9,150                                                          9,150
                                  ----    ---------   ----   -------     -------          ------        ------     -------  -------
Balance, May 27, 1998 ........       -    4,694,158   $ 46   $40,116     $     -          $    -        $1,372     $     -  $41,534
                                  ====    =========   ====   =======     =======          ======        ======     =======  =======
Company:

Balance, May 28, 1998 ........       -            -   $  -   $     -     $     -         $     -        $    -     $     -  $     -
Initial capitalization .......            6,778,700     68    30,447      (1,525)                                            28,990
Capital contribution .........                                 9,000                                                          9,000
Comprehensive income
(loss):
   Net loss ..................                                                                          (3,434)              (3,434)
   Unrealized gain on
     investments
       (net of taxes) ........                                                                 9                                  9
                                                                                                                            -------
Total comprehensive
  income (loss) ..............                                                                                               (3,425)
Forgiveness of notes
  receivable, net of
  accrued interest ...........                                               629                                                629
                                  ----    ---------   ----   -------     -------         -------        ------     -------  -------
Balance, December 31, 1998 ...       -    6,778,700     68    39,447        (896)              9        (3,434)          -   35,194

Comprehensive income:
   Net income ................                                                                           7,652                7,652
   Unrealized loss on
     investments
       (net of taxes) ........                                                               (33)                               (33)
                                                                                                                            -------
Total comprehensive income ...                                                                                                7,619
Forgiveness of notes
  receivable, net of accrued
  interest ...................                                               245                                                245
Proceeds from capital
  transactions ...............            1,456,742     14     8,487                                                          8,501
Issuance of common stock
in public offering, net of
expenses .....................            2,187,500     22    27,127                                                         27,149
Non-cash expense for
vested director's options ....                                 3,644                                                          3,644
                                  ----   ----------   ----   -------     -------         -------        ------      ------  -------
Balance, December 31, 1999           -   10,422,942    104    78,705        (651)            (24)        4,218           -   82,352

Comprehensive income:
  Net income .................                                                                          15,778               15,778
  Unrealized gain on
    investments (net of taxes)                                                                22                                 22
                                                                                                                            -------
Total comprehensive income ...                                                                                               15,800
Forgiveness of notes
  receivable, net of accrued
  interest ...................                                               334                                                334
Issuance of preferred stock ..   1,500   (1,500,000)   (15)                                                                     (15)
Conversion of preferred
stock ........................  (1,500)   1,500,000     15                                                                       15
Treasury shares purchased ....                                                                                     (17,850) (17,850)
                                ------   ----------   ----   -------       -----          ------       -------     -------  -------
Balance, December 31, 2000 ...       -   10,422,942   $104   $78,705       $(317)         $   (2)      $19,996    $(17,850) $80,636
                                ======   ==========   ====   =======       =====          ======       =======    ========  =======
</TABLE>

   The accompanying notes are an integral part of these financial statements.

<PAGE>
                              HOMESERVICES.COM INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                                   Company                        Predecessor
                                                 -------------------------------------------    ---------------
                                                                                May 28, 1998    January 1, 1998
                                                  Year Ended     Year Ended       Through           Through
                                                 December 31,   December 31,    December 31,        May 27,
                                                      2000          1999           1998              1998
                                                 ------------   ------------    ------------    ---------------
<S>                                                <C>            <C>            <C>            <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income (loss) ...........................      $ 15,778       $  7,652        $(3,434)       $1,953
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
   Depreciation and amortization ............        10,912          8,881          4,177         2,293
   Amortization of pending real estate sales
   contracts ................................           665          3,088         18,271            --
   Earnings in unconsolidated entities ......        (2,580)        (1,672)          (260)           --
   Distributed earnings in unconsolidated ...
   entities .................................         2,553          1,192            260            --
   Loss (gain) on sale of office property ...
   and equipment ............................           455            121            197            (6)
   Decrease in notes receivable from ........
   shareholders .............................           334            245            629            --
   Deferred income taxes ....................         1,619           (515)        (2,224)           79
   Non-cash expense for vested director's
   options ..................................            --          3,644             --            --
   Change in assets and liabilities, net of
   effects from companies purchased:
     Commission and other trade receivables,
     net of allowance .......................        (1,767)        (3,122)            --          (281)
     Mortgage loans held for sale ...........        (2,574)        10,409         (7,287)           --
     Income taxes receivable ................          (197)         3,368             (5)           --
     Payable to affiliates ..................          (642)           519             --            --
     Agent profit sharing ...................           393            701          1,169          (164)
     Accounts and commissions payable and
     accrued expenses .......................           (40)        (1,070)            (7)         (576)
     Other assets and other liabilities .....          (846)          (387)           942         1,693
                                                   --------       --------       --------       -------
NET CASH PROVIDED BY OPERATING ACTIVITIES ...        24,063         33,054         12,428         4,991
                                                   --------       --------       --------       -------

CASH FLOWS USED IN INVESTING ACTIVITIES:
   Purchases of companies, net of cash and
   cash equivalents acquired ................          (707)       (36,820)       (96,478)           --
   Purchases of office property and equipment        (8,374)        (9,396)        (2,650)         (900)
   Other investing ..........................          (229)          (353)             2             9
                                                   --------       --------       --------       -------
NET CASH USED IN INVESTING ACTIVITIES .......        (9,310)       (46,569)       (99,126)         (891)
                                                   --------       --------       --------       -------

CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
   Treasury stock repurchase ................       (17,850)            --             --            --
   Issuance of common stock in public
   offering, net of expenses ................            --         27,149             --            --
   Payments of long-term debt ...............          (413)       (32,084)        (7,753)         (872)
   Proceeds from long-term debt .............            --         31,647         35,000            --
   Net change in revolving credit facility ..        (1,000)       (14,000)        25,000            --
   Proceeds from capital transactions .......            --          8,501         37,990            --
   Distributions and dividends paid to parent            --             --             --        (1,068)
   Loan costs ...............................            17           (494)          (425)           --
                                                   --------       --------       --------       -------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES ..................................       (19,246)        20,719         89,812         (1,940)
                                                   --------       --------       --------       -------

Net (decrease) increase in cash and cash
  equivalents ...............................        (4,493)         7,204          3,114         2,160
Cash and cash equivalents at beginning of
period ......................................        10,318          3,114             --         2,590
                                                   --------       --------       --------       -------
Cash and cash equivalents at end of period ..      $  5,825       $ 10,318       $  3,114       $ 4,750
                                                   ========       ========       ========       =======
</TABLE>

   The accompanying notes are an integral part of these financial statements.

<PAGE>
HOMESERVICES.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF BUSINESS ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES AND
    PRACTICES

CORPORATE OVERVIEW AND BASIS OF PRESENTATION
HomeServices.Com Inc. (the "Company" or "HomeServices"),  was formed on July 13,
1999,  for the  purpose of merging  with  MidAmerican  Realty  Services  Company
("MidAmerican  Realty"). On October 7, 1999, the Company merged with MidAmerican
Realty. The accompanying  financial  statements include the financial  position,
results of operations and cash flows of HomeServices,  MidAmerican  Realty,  and
the wholly owned subsidiaries as if the Company was consolidated for all periods
presented.  Approximately 83% of the outstanding common stock of the Company was
owned by MidAmerican  Energy  Holdings  Company  ("MidAmerican  Holdings") as of
December 31, 2000.

The accompanying financial statements include the operations of Iowa Realty Co.,
Inc.,  including  Edina  Realty  Home  Services,  prior  to  being  acquired  by
MidAmerican  Realty on May 27, 1998 and are referred to as the Predecessor.  The
Company had no substantive  operations  prior to the  acquisition of Iowa Realty
Co., Inc. and the financial  statements  of the Company  reflect its  operations
from May 28, 1998, the date it commenced operations.

PRINCIPLES OF CONSOLIDATION
The consolidated  financial statements include HomeServices and its wholly owned
subsidiaries.  All significant  intercompany balances and transactions have been
eliminated in consolidation.

USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and short-term investments purchased with
maturities of three months or less, excluding cash held in trust.

INVESTMENTS
Non-consolidated entities
The Company accounts for its non-consolidated  entities using the equity method,
unless the Company does not have the ability to exercise  significant  influence
over the invested operating and financial policies, in which case the investment
is accounted for using the cost method.

Investment securities
Marketable debt securities,  which are included in other assets,  are classified
as available-for-sale or held-to-maturity. Management determines the appropriate
classification of debt securities at the time of purchase. Securities classified
as available-for-sale are stated at fair value, with unrealized gains and losses
reported in accumulated  other  comprehensive  income in  stockholders'  equity.
Realized gains and losses on sales of investments  are included in other income.
Debt  securities  are  classified as  held-to-maturity  when the Company has the
positive intent and ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost. Interest on debt securities is included
in interest income.

OFFICE PROPERTY AND EQUIPMENT
Office property and equipment is carried at cost less accumulated  depreciation.
Major renewals and betterments are  capitalized,  while  maintenance and repairs
that do not  improve or extend  the life of the  respective  assets are  charged
against earnings in the current period.

<PAGE>

Depreciation  and  amortization  are provided on  straight-line  and accelerated
methods over the following estimated useful lives:

 Buildings                   18 - 31 years
 Furniture and equipment      3 - 10 years
 Leasehold improvements      Shorter of the life of the underlying lease
                             or the estimated useful life of the improvement.

Upon sale or retirement of office  property and equipment,  the cost and related
accumulated depreciation are eliminated from the accounts and the resulting gain
or loss is included in the Statement of Income.

INTANGIBLE ASSETS
Intangible assets include goodwill,  which is being amortized on a straight line
basis  typically  over 30 years.  Whenever  events or changes  in  circumstances
indicate  that the  carrying  amount of  goodwill  may not be  recoverable,  the
Company  reviews the  carrying  value of goodwill  for  impairment  based on the
operating cash flows (undiscounted and without interest) of the related business
unit. If the  projection of operating  cash flows over the remaining life of the
goodwill proves to be less than the carrying value of goodwill, an impairment is
recognized.  The amount of the  impairment is calculated by taking the excess of
the goodwill over the present value of estimated expected future cash flows over
the remaining life of the goodwill using an appropriate discount rate.

Non-compete  agreements  that have a value to the Company are stated at cost and
are amortized over the lives of the agreements.

AMOUNTS HELD IN TRUST
The Company  maintains  separately  designated  trust  accounts for  homebuyers'
earnest  money and other  deposits.  The  Company  holds such  funds  until sold
properties are closed and subsequently  disburses amounts in accordance with the
settlement instructions.

INCOME TAXES
Income  taxes are  accounted  for using the asset and  liability  method,  which
requires  deferred taxes to be recognized by applying  enacted  statutory  rates
applicable to future years to the differences  between the carrying  amounts and
the tax bases of existing assets and liabilities.

REVENUE RECOGNITION
Commission  revenue from real estate brokerage  transactions and related amounts
due to agents are recognized when title has transferred from seller to buyer.

Title fee revenue from real estate  transactions  and related amounts due to the
title insurer are recognized when consideration is received.

Fees  related to loan  originations  are  recognized  when the  related  loan is
delivered to the third party purchasers.

BRANDING AGREEMENTS
The Company may enter into branding  agreements with third parties,  which allow
the  Company's  tradenames  and  logos  to be  associated  with  the  activities
conducted by the third parties.  Revenue from these  agreements is recognized as
service is provided,  or in the case of up-front  payments,  when no  additional
services or obligations are required of the Company.

The Company  entered into an  agreement  with a third party  providing  for such
party  to use the  Company's  name  in  conjunction  with  the  residential  and
commercial  activities conducted by the third party. The agreement also provides
the  Company  with a 60-day  right of first  refusal to  purchase a  controlling
interest in the third party's operation should a sale be initiated.  The Company
has agreed to pay $10,000  monthly for these  rights.  The  agreement  was dated
October  13,  1998,  and has a term of five years with an  additional  five-year
renewal option by the third party.

FRANCHISE SALES
The Company  sells real estate  brokerage  franchises to  established  brokerage
companies.  In exchange for certain fees, the Company  provides the right to use
certain names and related  trademarks.  In 2000 and 1999, the Company recognized
net revenue of $824,000  and  $810,000,  respectively  related to the  franchise
operation.  In 1998, the Company  recognized net revenue of $602,000  related to
the franchise  operation.  Through May 27, 1998, the  Predecessor had recognized
net revenues of $282,000 related to franchise operations.

<PAGE>

Revenue from franchising activities includes an initial franchise fee as well as
continuing  franchise fee revenue based on the gross commission  income realized
by the franchisee.  The initial franchise fee, designed to cover  administrative
costs  incurred by the Company,  is  recognized  as revenue  when the  franchise
agreement is effective,  at which time all initial services are provided and the
Company has no remaining  material  conditions or obligations and the franchisee
has begun  operating under the new name.  Revenue  related to ongoing  franchise
operations is recognized upon the closing of real estate sales  transactions and
is included as a component of other revenue.  The Company provides  advertising,
supervision, training and assistance in support of its ongoing franchisees.

BUSINESS PROMOTION AND ADVERTISING
Advertising and promotion costs are expensed as incurred.

RESTRICTED ASSETS
Included in other  assets are  restricted  assets in the amount of $318,000  and
$255,000 at December 31, 2000 and 1999, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value  estimates  are made at a specific  point in time,  based on relevant
market  information and information about the financial  instrument.  Because no
market exists for a significant portion of the Company's financial  instruments,
fair  value  estimates  are  based  on  judgments   regarding   future  expected
experience,   current  economic  conditions,  risk  characteristics  of  various
financial  instruments  and other  factors.  These  estimates are  subjective in
nature and  involve  uncertainties  and  matters of  significant  judgment  and,
therefore,  cannot be determined  with precision.  Changes in assumptions  could
significantly affect the estimates.

The Company  estimates  the fair value for its financial  instruments  using the
methods and assumptions set forth below:

     Cash and cash equivalents
     The  carrying  amount  approximates  the  estimated  fair  value due to the
     short-term nature of the investments.

     Commissions and other trade receivables
     The carrying amount of commissions and other trade receivables approximates
     the estimated fair value due to the short-term nature of the investments.

     Mortgage loans held for sale
     Mortgage  loans  held for sale are  carried at the lower of cost or market,
     computed  on the  aggregate  basis.  Market  value is  computed  using  the
     outstanding  commitment  price  from the  investors.  The  carrying  amount
     approximates the estimated fair value.

     Securities
     Fair  values  of  securities  are  based  on  quoted  market  prices  where
     available. If quoted market prices are not available, fair values are based
     on quoted market  prices of  comparable  instruments.  The  securities  are
     stated at market  value  with the  unrealized  gain or loss  included  as a
     component of accumulated other comprehensive income.

     Long-term debt
     Rates  currently  available to the Company for such borrowings with similar
     terms and remaining  maturities  are used to discount the future cash flows
     to estimate fair value for private  placement  notes. The fair value of the
     private placement notes was  approximately  $31.5 million and $31.0 million
     at December 31, 2000 and 1999, respectively.

     The carrying  value of the revolving  credit  facility at December 31, 2000
     approximated  fair value as the facility has a floating rate based upon the
     current interest rate.

     Derivative Financial Instruments
     The  Company  uses  interest  rate swaps to reduce the impact of changes in
     interest rates on variable-rate debt. The net effect of these agreements is
     recorded as interest expense. Interest rate swap agreements effectively fix
     the interest rates on a portion of the Company's  variable-rate debt. These
     agreements are not adjusted to market value as they are used only to manage
     interest  expense  and the intent is to hold them until  their  termination
     date.  The fair value of the  interest  rate swap at December  31, 2000 and
     1999 was $136,000 and $346,000,  respectively,  using the cash  termination
     value.

<PAGE>

ACCOUNTING FOR COMPUTER SOFTWARE COSTS
In accordance with Statement of Position (SOP) No. 98-1, Accounting for the Cost
of  Computer  Software  Developed  or Obtained  for  Internal  Use,  the Company
capitalizes qualified software costs and amortizes these costs over five years.

NEW ACCOUNTING PRONOUNCEMENTS
In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  (SFAS)  No.  133,  Accounting  for  Derivative
Instruments  and  Hedging  Activities.   The  statement  requires  companies  to
recognize all derivatives as either assets or liabilities,  with the instruments
measured  at fair  value.  The  accounting  for  changes  in the fair value of a
derivative  depends on the  intended  use of the  derivative  and the  resulting
designation.  The Company adopted SFAS 133 on January 1, 2001.  Adoption of this
statement did not have a material  impact on the Company's  financial  position,
results of operations or cash flows.

RECLASSIFICATIONS
Certain  reclassifications  have  been  made  to the  1999  and  1998  financial
statements to conform to the 2000 classification.

2.  SUPPLEMENTARY CASH FLOW INFORMATION

Supplemental disclosure of cash flow information (in thousands) -
<TABLE>
<CAPTION>

                                              COMPANY                      PREDECESSOR
                        ---------------------------------------------    ----------------
                        Year Ended December 31,         May 28, 1998      January 1, 1998
                        -----------------------         Through               Through
                          2000           1999       December 31, 1998      May 27, 1998
                        --------       --------     -----------------    -----------------
<S>                      <C>            <C>               <C>                <C>
Cash paid for interest   $3,203         $4,269            $1,292             $  695
Cash paid for taxes      $8,886         $3,188            $4,258             $1,648
</TABLE>

Supplemental schedule of noncash investing and financing activities
(in thousands) -
<TABLE>
<CAPTION>

                                            COMPANY                      PREDECESSOR
                        ---------------------------------------------    ----------------
                        Year Ended December 31,         May 28, 1998      January 1, 1998
                        -----------------------         Through               Through
                          2000           1999       December 31, 1998      May 27, 1998
                        --------       --------     -----------------    -----------------

<S>                        <C>            <C>             <C>                <C>
Equipment under capital
lease agreements           $168           $345            $    -             $ -
Acquisition payment in
accounts payable           $  -           $  -            $  919             $ -
Common stock issued to
minority shareholders
                           $  -           $  -            $1,525             $ -
</TABLE>

<PAGE>

3.  ACQUISITIONS

In 1998 and 1999,  the Company  purchased  the  following  companies  from third
parties:
                                                                 Purchase Price
Acquisition Date    Company                     Location         (in thousands)
----------------    -------                     --------         --------------

May 27, 1998        Iowa Realty Co., Inc.,      Des Moines, IA         $78,300
                    Including Edina Realty      Minneapolis, MN
                    Home Services of Minnesota  Springfield, MO
                    (Predecessor)

August 18, 1998     CBS Real Estate Company     Omaha, NE              $ 5,630

August 18, 1998     HOME Real Estate Company    Omaha, NE              $ 5,200
                    of Omaha

September 1, 1998   J.C. Nichols Residential    Kansas City, MO        $17,300
                    Real Estate

December 18, 1998   Nebraska Land Title         Omaha, NE              $   891
                    & Abstract

July 9, 1999        Paul Semonin Realtors       Louisville, KY         $13,348

August 23, 1999     Long Realty Company         Tucson, AZ             $16,463

December 1, 1999    Champion Realty Inc.        Annapolis, MD          $ 8,190

Each  acquisition  was accounted  for as a purchase  business  combination.  All
identifiable  assets acquired and liabilities assumed were assigned a portion of
the acquisition price equal to their fair value at the date of acquisition.  The
following table reconciles the fair value of net assets acquired to the purchase
price (dollars in thousands):

<TABLE>
<CAPTION>

                                     CBS      HOME     J.C.     Nebraska
                          Iowa       Real     Real    Nichols    Land        Paul             Champion
                         Realty     Estate   Estate    Real     Title &    Semonin    Long     Realty,      Other
                        Co., Inc.     Co.      Co.    Estate    Abstract   Realtors  Realty     Inc.     Acquisitions  Total
                        ---------   ------   ------   -------   --------   --------  ------   --------   ------------  -----
<S>                       <C>       <C>      <C>      <C>        <C>       <C>      <C>        <C>           <C>        <C>

Cash, cash held in
  trust and Investments   $12,701   $  504   $  452   $ 2,106    $   357   $ 1,268  $   918    $ 1,377       $    -    $ 19,683

Pending real estate
  sales contracts          14,231    1,052    1,157     1,831          -     1,700    1,055        998           22      22,046
Other receivables          12,281       52      225     4,799         13         -      461        254            -      18,085
Fixed assets               12,706      618      502     1,734         62     1,429    1,413        673           75      19,212
Other intangibles
  and prepaid               3,415      199       20       910        295        13      238        187            -       5,277
Goodwill                   54,607    3,842    3,145    13,628        437    11,038   16,080      6,826          278     109,881
                          -------  -------   ------    ------    -------   -------  -------     ------      -------    --------
Fair value of assets
  acquired                109,941    6,267    5,501    25,008      1,164    15,448   20,165     10,315          375     194,184
Liabilities assumed        31,641      637      301     7,708        273     2,100    3,702      2,125            -      48,487
                          -------  -------   ------   -------    -------   -------  -------    -------      -------    --------

Purchase price           $ 78,300  $ 5,630   $5,200   $17,300    $   891   $13,348  $16,463    $ 8,190      $   375    $145,697
                         ========  =======   ======   =======    =======   =======  =======    =======      =======    ========
</TABLE>

<PAGE>

Upon acquisition of the real estate brokerage companies, the Company established
an asset for the value of pending  real  estate  sales  contracts.  The asset is
amortized over three months, the period in which the related revenue is earned.

Immediately  prior to the  acquisition of the  Predecessor  by the Company,  the
Predecessor   liquidated  a  joint  venture  with  an   investment   balance  of
approximately  $3.1 million.  In connection  with  liquidation,  $1,168,000  was
included in assets  purchased by the Company and $1,961,000  was  transferred to
the  Predecessor's  parent  (AmerUs  Group,  Inc., an unrelated  third party) as
reflected  on the  statement  of  changes  in  stockholders'  equity.  Income of
$477,000 was  recorded for this  investment  in 1998 by the  Predecessor  and is
included in other revenue on the statement of income.

Immediately  prior to the  acquisition of the  Predecessor  by the Company,  the
Predecessor's  parent acquired the minority interest in Edina Financial Services
(a subsidiary of Edina Realty Home Services) for cash of  $9,150,000,  which was
recorded as a capital contribution, and additional goodwill of $6,335,000.

The following pro forma financial information represents the unaudited pro forma
results of operations as if the acquisitions had been completed on January 1 for
each period presented, after giving effect to certain adjustments related to the
acquisitions.  These  pro  forma  results  have been  prepared  for  comparative
purposes  only and do not purport to be  indicative of the results of operations
which would have been  achieved  had these  acquisitions  been  completed  as of
January 1 of each period, nor are the results indicative of the Company's future
results of operations (dollars in thousands,  except per share amounts).  No pro
forma results are presented for year ended  December 31, 2000 as no  significant
acquisitions were made during the year.

                                     Year Ended December 31,
                                     -----------------------
                                       1999           1998
                                     --------       --------
Revenues                             $459,482       $410,061
Operating expenses                   $439,989       $412,383
Net income (loss)                    $ 10,214       $ (2,587)
Earnings per share - Basic           $   1.28       $  (0.38)
Earnings per share - Diluted         $   1.28       $  (0.38)

4.  EQUITY TRANSACTIONS

On May 8,  1998,  the  Predecessor  sold 80% of its 100%  interest  in HOME Real
Estate Holdings, Inc. (formerly Home Real Estate Company), valued at $3 million,
to its minority shareholders.  In addition, 64,692 shares of common stock of the
Predecessor,  held by the minority  shareholders,  and valued at $700,000,  were
exchanged for the remaining 20% of HOME Real Estate Holdings,  Inc. The proceeds
from the sale of the 80%  interest  were  received by the  Predecessor's  parent
company  and  are  reflected  as a  dividend  in the  statement  of  changes  in
stockholders'  equity.  The  sale of HOME  Real  Estate  Holdings,  Inc.  by the
Predecessor  was at book  value  and  therefore  no gain or loss on the sale was
recorded.

The 1998  acquisitions  as described  above were  partially  funded  through the
issuance of 10,000 shares  (6,778,700 after giving effect to exchange of shares)
of MidAmerican Realty's common stock to its parent,  valued at approximately $29
million.  Additional  financing  was  provided  through  a  $9  million  capital
contribution from MidAmerican Holdings,  the issuance of private placement notes
and a revolving credit facility provided by third party lenders.

On August 8, 1999,  an aggregate of 2,149 shares of common stock of  MidAmerican
Realty were issued in connection with the  acquisition of Paul Semonin  Realtors
at a purchase  price of  $3,955.90  per share.  The per share value was based on
MidAmerican  Realty's  estimated June 30, 1999 book value,  based on preliminary
financial  results,  which is equivalent to a purchase  price of $5.84 per share
(1,456,742  shares) of HomeServices stock after giving effect to the exchange of
677.87  shares  of  HomeServices  common  stock  for each  share of  MidAmerican
Realty's common stock in the merger described in Note 1.

On October 14, 1999, the Company  completed its initial public offering in which
it sold  2,187,500  newly  issued  shares  of  common  stock  and  its  majority
shareholder,  MidAmerican  Holdings,  sold 1,062,500 shares. Net proceeds to the
Company were approximately $27.1 million.

<PAGE>

On October 14, 1999, each director of HomeServices received, as compensation for
agreeing to serve as a director,  fully vested options to purchase 50,000 shares
of  common  stock at an  exercise  price  equal to  $5.89.  The  exercise  price
represents  the book value of the common  stock on June 30,  1999,  after giving
effect to the issuance of approximately  677.87 shares of  HomeServices'  common
stock in exchange for each share of common stock of MidAmerican  Realty,  in the
merger of HomeServices and MidAmerican  Realty on October 7, 1999.  HomeServices
recorded a one-time  non-cash after tax charge  against income of  approximately
$2.2 million ($3.6 million pre-tax) related to these options. As of December 31,
2000, none of these options had been exercised.

On October 12, 2000, the Company purchased  1,700,000 of its outstanding  common
shares  in a block  trade at a price of  $10.50  per  share.  As a result of the
transaction,  MidAmerican  Holdings ownership  increased to approximately 83% of
the Company's outstanding common stock.

5.  OFFICE PROPERTY AND EQUIPMENT

Office property and equipment consisted of the following (dollars in thousands):


                                    As of December 31,
                                    ------------------
                                      2000      1999
                                    -------    -------
Land                                $ 1,561     $1,561
Buildings                             8,215      6,814
Office property and equipment        28,073     21,976
                                    -------     ------
                                     37,849     30,351
Less accumulated depreciation        14,057      7,408
                                    -------    -------
                                    $23,792    $22,943
                                    =======    =======

Depreciation  expense for the Company in 2000, 1999 and 1998 totaled $6,809,000,
$5,373,000  and  $2,609,000,   respectively   while  the  Predecessor   recorded
$1,488,000 of depreciation expense through May 27, 1998.

The Company rents office space for its various brokerage offices. Future minimum
rental payments under noncancelable  operating leases at December 31, 2000, were
as follows (dollars in thousands):

               To Related Parties       To Third Parties           Total
               ------------------       ----------------          -------
   2001              $1,737                 $11,877               $13,614
   2002               1,581                  10,060                11,641
   2003               1,382                   7,967                 9,349
   2004               1,000                   5,477                 6,477
   2005                 742                   4,000                 4,742
   Thereafter         2,012                   8,353                10,365
                     ------                 -------               -------
                     $8,454                 $47,734               $56,188
                     ======                 =======               =======

<PAGE>

6.  INTANGIBLE ASSETS

Intangible assets consisted of the following (dollars in thousands):

                                           As of December 31,
                                      ----------------------------
                                        2000                1999
                                      ---------           --------
Goodwill                               $109,881           $109,400
Non-compete agreements                    1,477              1,503
Other intangibles                           173                 79
                                       --------           --------
                                        111,531            110,982
Less accumulated amortization             8,918              4,926
                                       --------           --------
                                       $102,613           $106,056
                                       ========           ========

The Company  amortized  $4,103,000,  $3,508,000 and $1,568,000 in 2000, 1999 and
1998,  respectively while the Predecessor recorded  amortization of $805,000 for
intangible assets through May 27, 1998.

7.  INVESTMENTS IN NON-CONSOLIDATED ENTITIES

Included in other assets are investments in non-consolidated entities. Condensed
unaudited  financial  information  for entities  accounted  for under the equity
method is as follows (dollars in thousands):

                              As of December 31,
                          --------------------------
                           2000               1999
                          ------             -------
Current assets            $2,274             $1,094
Total assets              $2,830             $2,008
Current liabilities       $  890             $   61
Total liabilities         $1,094             $   61


<TABLE>
<CAPTION>

                                                       COMPANY                     PREDECESSOR
                                ---------------------------------------------    ---------------
                                Year Ended December 31,       May 28, 1998       January 1, 1998
                                -----------------------        Through               Through
                                 2000            1999       December 31, 1998      May 27, 1998
                                -------         -------     -----------------    ---------------
<S>                             <C>             <C>            <C>                     <C>
Total revenues                  $20,450         $13,318        $ 1,701                 $ -
Operating expenses              $15,435         $11,592        $ 1,142                 $ -
Net income                      $ 5,015         $ 3,358        $   521                 $ -
</TABLE>

Net earnings in entities  accounted for under the equity method were $2,580,000,
$1,672,000  and  $260,000 for the years ended  December  31, 2000,  1999 and the
period ended December 31, 1998, respectively and $0 for the Predecessor.

<PAGE>

8.  LONG-TERM DEBT

Long term debt consisted of the following (dollars in thousands):

                                      As of December 31,
                                      ------------------
                                        2000       1999
                                      -------    -------
7.12% Private placement notes         $35,000    $35,000
Revolving credit facility              10,000     11,000
Other                                   2,404      2,817
                                      -------    -------
                                       47,404     48,817
Less current portion                      742        707
                                      -------    -------
                                      $46,662    $48,110
                                      =======    =======

7.12% Private Placement Notes
In November  1998,  the Company  issued $35 million of 7.12% fixed rate  private
placement senior notes due in annual increments of $5 million beginning in 2004.
Interest is due semi-annually on May 1 and November 1 of each year.

Revolving Credit Facility
In November 1998, the Company obtained a $25 million,  5-year credit facility of
which the Company had drawn down the entire amount as of December 31, 1998.  The
credit availability declined $1.5 million every six months for five years, and a
commitment  fee of 0.3% was charged on any unused  portion of the facility.  The
credit agreement had a variable interest rate (LIBOR) plus a credit spread based
on certain financial ratios.

On September 20, 1999, the Company entered into a new $75 million senior secured
revolving  credit  agreement  which  replaced  the  then  existing  $25  million
revolving credit facility.  The senior secured  revolving credit agreement has a
term of three  years and is secured by a pledge of the  capital  stock of all of
the existing and future  subsidiaries of the Company.  Amounts outstanding under
this revolving credit facility bear interest, at the Company's option, at either
the prime  lending  rate or LIBOR plus a fixed  spread of 1.25% to 2.50%,  which
varies,  based on the  Company's  cash flow leverage  ratio.  As of December 31,
2000,  the  blended  average  interest  rate on the  revolving  credit  facility
borrowings was 7.3%.

In  October  2000,  the  Company  obtained  a waiver of the  restricted  payment
provisions  under its $75 million  senior  secured  revolving  credit  agreement
related to the Company's  purchase of 1,700,000 of its outstanding  common stock
and agreed to reduce the amount of such  facility to $65  million to  facilitate
the purchase. Additional information on the stock repurchase is available in the
Consolidated  Statement  of Changes in  Stockholders'  Equity and  Comprehensive
Income.

During 1998, the Company entered into a three-year  interest rate swap agreement
to reduce the impact of changes in interest  rates on a portion of its revolving
credit facility.  At December 31, 2000 and 1999, the Company had outstanding one
interest  rate  swap  agreement  with a  financial  institution  having  a total
notional principal amount of $12.5 million.  This agreement  effectively changes
the Company's  interest  rate  exposure on $12.5 million of its floating  credit
facility  to a fixed  6.3%.  Interest  rate swaps are  subject to market risk as
interest rates fluctuate.  In the event that interest rates would rise above the
fixed rate, the Company is exposed to credit loss in the event of nonperformance
by the other party to the interest  rate swap  agreement.  However,  the Company
does not anticipate nonperformance by the counterparty. At December 31, 2000 and
1999,  the  fair  value  of this  swap  agreement  was  $136,000  and  $346,000,
respectively, using the cash termination value.

The  private  placement  notes and credit  facility  agreement  contain  various
financial  covenants,  including among other things,  a minimum net worth of $25
million plus 25% of consolidated net earnings,  maintenance of certain operating
ratios, 75% dividend payment restriction,  and maximum allowable indebtedness to
net worth of 65% to 35%.

Aggregate maturities of notes payable for the next five years and thereafter are
as follows (dollars in thousands):

     2001                        $ 742
     2002                       10,718
     2003                          532
     2004                        5,094
     2005                        5,025
     Thereafter                 25,293
                               -------
                               $47,404
                               =======

<PAGE>

In May  1998,  HomeServices  entered  into a  revolving  credit  agreement  with
MidAmerican  Holdings to borrow  funds from time to time,  primarily  to support
acquisitions.  As of December 31, 2000 and 1999,  there were no borrowings under
this  agreement.  The interest  rate on  borrowings is equal to the 30-day LIBOR
rate plus 1% (7.6% on December 31, 2000). On June 24, 1999 the revolving  credit
agreement with MidAmerican  Holdings was amended to reduce MidAmerican  Holdings
total commitment and Company's  borrowing capacity  thereunder from $100 million
to $10 million.

9.  INCOME TAXES
<TABLE>
<CAPTION>

                                                COMPANY                     PREDECESSOR
                           --------------------------------------------   ---------------
(Dollars in thousands)     Year Ended December 31,     May 28, 1998       January 1, 1998
                           -----------------------      Through                Through
                            2000           1999       December 31, 1998     May 27, 1998
                           -------        -------     -----------------   ---------------
<S>                        <C>            <C>             <C>                <C>
Current                    $ 8,689        $ 6,540         $   (23)           $ 1,585
Deferred                     1,619           (515)         (2,224)                79
                           -------        -------         -------            -------
Total expense (benefit)    $10,308        $ 6,025         $(2,247)           $ 1,664
                           =======        =======         =======            =======
</TABLE>

     The tax  effects of  temporary  differences  that give rise to  significant
portions of the deferred tax asset and deferred tax liabilities  were as follows
(dollars in thousands):

                                               As of December 31,
                                               ------------------
                                                2000        1999
                                               ------      ------
Deferred tax assets related to:
Employee benefits                              $4,035      $3,218
Directors options                               1,479       1,479
Bad debt reserves                                 161       1,141
Self-insurance reserves                           278         356
Unrealized losses                                 502         138
NOL carryforward                                  340           -
Other                                             508         431
                                               ------      ------
  Total deferred tax assets                    $7,303      $6,763
                                               ------      ------

Deferred tax liabilities related to:
Intangibles                                    $5,413      $3,669
Other                                             830         415
                                               ------      ------
  Total deferred tax liabilities                6,243       4,084
                                               ------      ------
  Net deferred tax asset                       $1,060      $2,679
                                               ======      ======

The following table is a  reconciliation  between the effective  income tax rate
and statutory federal income tax rate for the year ended December 31, 2000, 1999
and the period ended December 31, 1998:
<TABLE>
<CAPTION>

                                                          COMPANY                    PREDECESSOR
                                   ---------------------------------------------   ---------------
(Dollars in thousands)             Year Ended December 31,       May 28, 1998      January 1, 1998
                                   -----------------------         Through             Through
                                    2000             1999      December 31, 1998     May 27, 1998
                                   ------           ------     -----------------   --------------
<S>                                 <C>              <C>              <C>               <C>
Statutory federal income
  tax rate                          35.0%            35.0%            35.0%             35.0%
State income tax, net of
  federal income tax benefit
                                     3.9              8.5              5.4               7.0
Amortization of
  acquisition costs                  0.2              0.3              0.3                 -
Other                                0.4              0.3             (1.1)              4.0
                                    ----             ----             ----              ----
Effective federal and state
income tax rate                     39.5%            44.1%            39.6%             46.0%
                                    ====             ====             ====              ====
</TABLE>

<PAGE>

The Company is required to establish a "valuation  allowance" for any portion of
the  deferred  tax  assets  that  management  believes  will  not  be  realized.
Management  considers  the  scheduled  reversal  of  deferred  tax  liabilities,
projected  future  taxable  income and tax  planning  strategies  in making this
assessment.  In order to fully realize the deferred tax assets, the Company will
need to generate  future  taxable  income.  Based upon the levels of  historical
taxable income and projections for future taxable income, management believes it
is more likely than not the Company  will  realize the  benefits of the deferred
tax assets and, therefore, no such valuation allowance has been established.

10.  EARNINGS PER SHARE

A reconciliation of basic and diluted earnings per share is as follows (in
thousands, except per share data):
<TABLE>
<CAPTION>

                                                      COMPANY                    PREDECESSOR
                                -------------------------------------------    ---------------

                                Year Ended December 31,     May 28, 1998       January 1, 1998
                                -----------------------       Through               Through
                                  2000            1999    December 31, 1998    May 27, 1998
                                -------         -------   -----------------    ---------------

<S>                             <C>             <C>          <C>                  <C>
Net income (loss)               $15,778         $ 7,652      $(3,434)             $1,953
                                =======         =======      =======              ======
Weighted average shares
outstanding - basic               9,335           7,956        6,779               4,748
Effect of dilutive
securities:
  Stock options                     189              56            -                   -
  Convertible preferred stock       694               -            -                   -
                                 ------          ------       ------               -----
Weighted average shares
outstanding - diluted            10,218           8,012        6,779               4,748
                                 ======          ======       ======              ======
Basic earnings per share
                                 $ 1.69          $ 0.96       $(0.51)             $ 0.41
                                 ======          ======       ======              ======
Diluted earnings per share       $ 1.54          $ 0.96       $(0.51)             $ 0.41
                                 ======          ======       ======              ======
</TABLE>

11.  BENEFIT PLANS

The  Company  maintains  various  defined  contribution  salary  deferral  plans
covering  substantially  all  employees  under  section  401(k) of the  Internal
Revenue  Code.  The plans allow for matching and employer  contributions  not to
exceed the maximum allowable for tax purposes.  The Company match ranges from 25
to 100 percent of the employee  contribution for the first 4 to 6 percent of the
employee's annual compensation  depending upon the specific plan.  Additionally,
one plan  provides for a Company  contribution  equal to a percentage  of annual
compensation for each active, eligible employee on December 31 of each year. Two
other plans provide for additional  Company  contributions  at the discretion of
the Company. For the periods ended December 31, 2000, 1999 and 1998, the Company
recognized expense of $1.5 million, $1.3 million and $1.2 million for the plans,
respectively  while the Predecessor  recognized  expense of $100,000 through May
27, 1998.

Post-Retirement Benefits Other Than Pensions
The Company  offered a  post-retirement  benefit plan,  which  provided  certain
eligible participants with medical, dental and life insurance benefits. The plan
was  terminated  effective  January  1,  1999.  The plan was  unfunded,  and the
benefits were  generally  based on a combination  of age and years of service at
retirement.  The  plan  provided  no  vesting  rights  for  participants.   Upon
termination of the plan, there was one retiree collecting benefits.  The medical
and  dental  insurance  plan  was  contributory,  with  retirees'  contributions
adjusted  annually,  and  contained  other  cost  sharing  features  such  as  a
deductible  limit and  coinsurance.  The life  insurance  plan was  reduced by 4
percent each month on a straight-line basis, upon retirement of the participant,
to a $10,000  minimum  level.  At  December  31,  1998,  the Company had accrued
$467,000 related to this plan. The Company had net post-retirement  plan expense
of $59,000  for the period from May 28, 1998 to  December  31,  1998,  while the
Predecessor recognized an expense of $55,000 through May 27, 1998.

<PAGE>

Agent Profit Sharing
Two  subsidiaries  of the Company provide a nonqualified  deferred  compensation
plan for certain sales agents. Under one plan, adopted in 1985 by a prior owner,
the board of directors of the subsidiary  determines annually which agents shall
be entitled to  participate,  the benefit  amount  (based upon a  percentage  of
annual  commissions paid to the  participants) and the benefit payment date. The
plan is not  funded.  At  December  31,  2000 and 1999,  the Company had accrued
approximately  $5.5 million and $5.1 million,  respectively for estimated future
payments to  qualifying  sales agents and incurred  expenses of  $1,013,000  and
$922,000,  respectively  for the sales agents' deferred  compensation  plan. For
1998, the Company  incurred  expenses of $969,000 for the sales agents' deferred
compensation  plan,  while the predecessor  recognized  expenses of $136,000 for
this plan.

The second plan, adopted in 1994 by a prior owner,  provides for a benefit based
on profits  generated by  participating  agents.  Benefits are payable after ten
years of continuous licensed contract with the subsidiary.  At December 31, 2000
and 1999,  the Company  had  accrued  $1.2 and $1.1  million,  respectively  for
estimated  future  payments to  qualifying  sales agents and  incurred  (income)
expense of ($69,000) and $215,000,  respectively  for the sales agents' deferred
compensation  plan. The Company holds U.S.  Treasury Strips  (principal only) to
fund this obligation.  For 1998, the Company  incurred  expenses of $200,000 for
the sales agents' deferred compensation plan.

12.  RELATED-PARTY TRANSACTIONS

Related parties consist of entities associated by common ownership or controlled
by officers or directors of the Company.  The Company had the following balances
and  transactions  with related parties during the year ended December 31, 2000,
1999 and 1998 (in thousands):
<TABLE>
<CAPTION>

                                                   COMPANY                    PREDECESSOR
                             -------------------------------------------    ---------------
                             Year Ended December 31,    May 28, 1998        January 1, 1998
                             ----------------------       Through               Through
                              2000            1999     December 31, 1998     May 27, 1998
                             ------          ------    -----------------    ---------------
<S>                          <C>             <C>           <C>                   <C>
Assets:
  Accounts receivable        $  284          $   12        $    69               $    -
  Prepaid expenses               68               -              -                    -
                             ------          ------        -------               ------
                             $  352          $   12        $    69               $    -
                             ======          ======        =======               ======

Liabilities:
  Accounts payable           $  215          $1,042        $   354               $    -
  Accrued expenses                -               -             13                    -
                             ------          ------        -------               ------
                             $  215          $1,042        $   367               $    -
                             ======          ======        =======               ======

Stockholders' Equity:
  Notes receivable           $  317          $  651        $   896               $    -
                             ======          ======        =======               ======

Revenues:
  Title Fees                 $    -          $    -        $     -               $  387
  Other                           -               -              -                   11
                             ------          ------        -------               ------
                             $    -          $    -        $     -               $  398
                             ======          ======        =======               ======
Expenses:
  Occupancy                  $1,957          $  821        $   913               $  292
  Corporate allocations       1,138           1,656          1,552                  359
                             ------          ------        -------               ------
                             $3,095          $2,477        $ 2,465               $  651
                             ======          ======        -======               ======
Other income (expenses):
  Interest income            $  119          $  110        $    64               $   25
  Interest expense                -             (58)        (1,246)                (485)
                             ------          ------        -------               ------
                             $  119          $   52        $(1,182)              $ (460)
                             ======          ======        =======               ======
</TABLE>

Certain officers and employees of the Company were issued shares of common stock
in the Company upon its formation,  with a corresponding receivable recorded for
the fair  value of the stock.  The  initial  value of the 500 issued  shares and
corresponding receivables was $1.5 million.

<PAGE>

As certain performance levels are achieved over a five-year period, a portion of
the receivable  balance is forgiven and considered  compensation to the officers
and  employees.  In 2000 and 1999,  the  amount  accrued  to the  allowance  for
estimated  forgiveness and expensed as  compensation  was $334,000 and $245,000,
respectively.  The balance of the notes receivable at December 31, 2000 and 1999
was $317,000 and $651,000,  respectively.  The Company  charges  interest on the
outstanding  receivable  balance at a rate equal to its average annual borrowing
rate (7.24% at December 31,  2000).  Interest  income  recorded on the notes was
$119,000 and $110,000 in 2000 and 1999, respectively.

In 1998 and through  October 31, 1999,  the Company was charged for direct costs
incurred  by  MidAmerican  Holdings  on its behalf for legal,  accounting,  cash
management  and human  resource  services.  MidAmerican  Holdings also allocated
indirect costs for corporate overhead such as executive costs,  director's fees,
and MidAmerican Holdings interest. MidAmerican Holdings allocated indirect costs
to its  subsidiaries  based  on  their  individual  total  assets  and  payroll.
Management believes this method for allocating indirect cost is reasonable,  and
the costs reasonably  approximate those costs that would have been incurred on a
stand-alone basis.

Beginning  November 1, 1999, the Company is charged  $50,000 per month for costs
incurred by  MidAmerican  Holdings on its behalf for legal,  treasury,  employee
benefit plan and  insurance  administration  and other  services,  pursuant to a
services  agreement plus employee and out-of-pocket  costs and expenses incurred
by MidAmerican Holdings.

The  officers of several  subsidiaries  of the  Company are owners of  buildings
within which the Company  leases office space.  The future lease  obligations to
these related parties are disclosed further in Note 8.

13.  INVESTMENT SECURITIES

The investment  securities  held at December 31, 2000 consisted of the following
(dollars in thousands):

<TABLE>
<CAPTION>

                                                       Gross       Gross
                                        Amortized   Unrealized   Unrealized    Fair
                                          Cost        Gains       Losses      Value
                                        ---------   ----------   ----------   -----
<S>                                      <C>           <C>         <C>        <C>
Available-for-sale:
 Highwoods Properties, Inc               $  288        $   -       $ (2)      $  286
                                         ======        =====       ====       ======

Held-to-maturity:
 U.S. Treasury Strips (principal only)   $  677        $  80       $  -       $  757
 Agency obligation                          571            -        (53)         518
                                         ------        -----       ----       ------
                                         $1,248        $  80       $(53)      $1,275
                                         ======        =====       ====       ======
</TABLE>

The investment  securities  held at December 31, 1999 consisted of the following
(dollars in thousands):
<TABLE>
<CAPTION>
                                                     Gross        Gross
                                       Amortized   Unrealized   Unrealized   Fair
                                         Cost        Gains        Losses     Value
                                       ---------   ----------   ----------   -----
<S>                                       <C>       <C>           <C>        <C>
Available-for-sale:
 Highwoods Properties, Inc                $288      $    -        $(24)      $264
                                          ====      ======        ====       ====

Held-to-maturity:
 U.S. Treasury Strips (principal only)    $418      $    9        $  -       $427
 Agency obligation                         526           4           -        530
                                          ----      ------        ----       ----
                                          $944      $   13        $  -       $957
                                          ====      ======        ====       ====
</TABLE>

The maturities of held-to-maturity  investment  securities and their approximate
fair value at December 31, 2000 were as follows (dollars in thousands):

                                                  Amortized           Fair
                                                     Cost             Value
                                                  ---------          ------
Due after one year through five years              $   234           $  263
Due after five years through ten years             $ 1,014           $1,012

<PAGE>

14.  COMMITMENTS AND CONTINGENCIES

The J.C.  Nichols  Residential  asset purchase  agreement  requires  installment
payments to be made based on certain profitability levels achieved. The payments
are  required  60 days  after each close of  calendar  years 1999 and 2000.  The
maximum  amount  payable under the agreement is $500,000 per year.  For the year
ended  December  31,  2000 and 1999,  there was no  obligation  because  certain
profitability levels were not achieved.

The Long Realty  Company stock  purchase  agreement  also  requires  installment
payments be made after the closing  date,  if certain  profitability  levels are
achieved.  These payments are required after the close of calendar year 1999 and
2000. The maximum amount payable under the agreement is $1.5 million per year. A
payment  of  $275,000  was made for the year  ended  1999,  and  recorded  as an
additional cost of the  acquisition.  Any obligation due for the year 2000 is to
be paid  during 2001 and would also be  recorded  as an  additional  cost of the
acquisition.

The Champion Realty Inc. asset purchase  agreement requires a payment to be made
based on certain EBITDA levels  achieved in the fiscal year ending  December 31,
2000.  These  payments  are  required  within  120 days  after  the close of the
calendar year 2000.  The maximum amount payable under the agreement is $400,000.
For the year ended December 31, 2000,  there was no obligation  because  certain
EBITDA levels were not achieved.

The Company is a party to a number of lawsuits,  claims and assessments  arising
from the  operations  of its  business.  While the  results of lawsuits or other
matters against the Company cannot be predicted with certainty,  management,  in
consultation  with  legal  counsel,  does not  expect  these  matters  to have a
material adverse effect on the financial position, results of operations or cash
flows of the Company.

15.  STOCK-BASED COMPENSATION PLANS

The Company has a stock  option plan that  provides  for the  granting of either
incentive  stock  options or  non-qualified  stock  options to key employees and
non-employee members of the Company's Board of Directors.  The Company may grant
up to 3,000,000 stock options to its employees.  The options granted under these
plans are to purchase  common  stock at not less than  fair-market  value at the
date of grant with the  exception of the October 14, 1999 award of stock options
to the Board of  Directors.  On October 14, 1999,  each  director of the Company
received,  as  compensation,  for agreeing to serve as a director,  fully vested
options to purchase  50,000 shares of common stock at an exercise price equal to
$5.89.  The exercise price represents the book value of the common stock on June
30, 1999, after giving effect to the issuance of approximately  677.87 shares of
the  Company's  common  stock in  exchange  for each  share of  common  stock of
MidAmerican  Realty,  in the merger of HomeServices  and  MidAmerican  Realty on
October 7, 1999.  HomeServices  recorded  a one-time  non-cash  after tax charge
against income of  approximately  $2.2 million ($3.6 million pre-tax) related to
these  options.  Employee  options vest either  monthly over four years from the
date of grant or in annual  installments  of 25% and they  generally  fully vest
upon a change of control of the Company. The stock options expire ten years from
date of grant.

Following is a summary of the employee stock options activity for 2000 and 1999:

(Shares in thousands)                          2000                      1999
                                ------------------------------------   --------
                                              Weighted                 Weighted
                                               Average                 Average
                                   Options    Exercise    Options      Exercise
                                outstanding    Price     outstanding    Price
                                -----------   --------   -----------   --------
Balance at January 1, 2000
  and October 13, 1999             2,191       $13.34           -       $    -
Options granted                      172        11.49       2,216        13.36
Options exercised                      -            -           -            -
Options canceled/forfeited          (255)       15.00         (25)       15.00
                                   -----                    -----
Outstanding at year end            2,108       $12.98       2,191       $13.34
                                   =====       ======       =====       ======
Exercisable at year end              894       $10.85         506       $ 7.80
                                   =====       ======       =====       ======

For the number of shares  exercisable  as of  December  31,  2000,  the range of
exercise prices is $5.89 to $15.00.  The weighted average remaining  contractual
life is 8.8 years.

<PAGE>

The Company  applies the  intrinsic  value based  method of  accounting  for its
stock-based  employee  compensation  plans.  If the fair  value  method had been
applied,  incremental non-cash compensation expense would have been $1.0 million
and $1.2 million in 2000 and 1999, respectively. Net income and diluted earnings
per share  would have been $15.2  million and $1.49 per share,  respectively  in
2000. Net income and diluted earnings per share would have been $6.9 million and
$0.86 per share, respectively in 1999.


Assumptions                        2000           1999
                                 -------        -------
Expected term                    5 years        5 years
Expected volatility               30.30%         34.10%
Expected dividend yield            0.00%          0.00%
Risk free interest rate            5.02%          6.31%

16.  OPERATING SEGMENTS

The  Company  conducts  its  business  activity in a single  operating  segment.
Commission revenue from real estate brokerage services for the Company comprised
approximately  91%,  90% and 89% of  total  revenue  in  2000,  1999  and  1998,
respectively,  while the Predecessor  approximated 87%. The Company has no other
single source of revenue greater than 5%.


17.  QUARTERLY FINANCIAL DATA (UNAUDITED)

Following is a summary of the Company's  quarterly results of operations for the
year  ended  December  31,  2000 and  1999.  Earnings  Before  Interest,  Taxes,
Depreciation  and  Amortization  (EBITDA) is defined as net income (loss) before
income taxes,  interest and other income  (expense),  net, plus depreciation and
amortization and amortization of pending real estate sales contracts.

                                         Three Months Ended
                           ----------------------------------------------------
2000                       March 31        June 30    September 30  December 31
----                       --------       --------    ------------  -----------
Total revenues             $ 87,652       $138,897      $134,114     $110,030
Operating expenses ..      $ 91,358       $125,904      $120,648     $105,052
EBITDA ..............      $   (306)      $ 15,767      $ 16,257     $  7,590
Net income (loss) ...      $ (2,631)      $  7,341      $  7,873     $  3,195
Net income (loss) per
  share - basic .....      $  (0.28)      $   0.82      $   0.76     $   0.36
Net income (loss) per
  share - diluted ...      $  (0.28)      $   0.69      $   0.74     $   0.35

                                         Three Months Ended
                           -----------------------------------------------------
1999                       March 31        June 30    September 30   December 31
----                       --------       --------    ------------   -----------
Total revenues ......      $ 64,685       $103,039      $123,373      $102,194
Operating expenses ..      $ 66,229       $ 91,816      $114,414      $104,027
EBITDA ..............      $    437       $ 12,960      $ 13,473      $  1,904
Net income (loss) ...      $ (1,427)      $  6,053      $  4,865      $ (1,839)
Net income (loss) per
share: basic and diluted   $  (0.21)      $   0.89      $   0.62      $  (0.19)

18.  SUBSEQUENT EVENT:

In January 2001, the Company combined the mortgage  originations business of its
wholly  owned  Kansas  City  subsidiary,   Plaza  Mortgage,  into  its  mortgage
origination joint venture with Wells Fargo Home Mortgage,  a subsidiary of Wells
Fargo & Company.


<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------

To the Board of Directors and Shareholders of HomeServices.Com Inc.:

In our  opinion,  the  consolidated  financial  statements  listed  in the index
appearing  under  Item  14(a)(1)  on page 39  present  fairly,  in all  material
respects,  the financial  position of  HomeServices.Com  Inc. ("the Company") at
December 31, 2000 and 1999, and the results of its operations and its cash flows
for the years ended December 31, 2000 and 1999, for the period from May 28, 1998
through  December 31, 1998,  and for the period from January 1, 1998 through May
27, 1998, in conformity with  accounting  principles  generally  accepted in the
United States of America. In addition,  in our opinion,  the financial statement
schedule  appearing  under Item 14 (a) (2) on page 39  presents  fairly,  in all
material  respects,  the  information set forth therein when read in conjunction
with the related consolidated  financial statements.  These financial statements
and  financial  statement  schedule  are  the  responsibility  of the  Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statement  schedule based on our audits.  We conducted
our audits of these statements in accordance with auditing  standards  generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, the Company had
no  substantive  operations  prior to the  acquisition  of Iowa Realty Co., Inc.
("Iowa  Realty") on May 27, 1998 and commenced  operations on May 28, 1998.  The
results of operations, changes in stockholders' equity and comprehensive income,
and cash flows of Iowa Realty from  January 1, 1998 through its  acquisition  by
the Company are  presented  in the  consolidated  financial  statements  and are
designated as the "Predecessor".




/s/ PricewaterhouseCoopers LLP

Minneapolis, Minnesota
January 30, 2001


<PAGE>



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None



<PAGE>

                                    PART III.


ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES.

The following table sets forth  information  concerning the executive  officers,
directors  and key  employees  of  HomeServices.  Ages are as of March 31, 2001.
There are no family relationships among any of HomeServices' executive officers,
directors and key employees.


NAME                           AGE      POSITION

David L. Sokol(1)(2)           44       Chairman; Director
Ronald J. Peltier(1)           51       President and Chief Executive Officer;
                                        Director
Steven A. McArthur(1)(2)(3)    43       Senior Vice President, General Counsel
                                        and Secretary; Director
Galen K. Johnson               47       Senior Vice President and Chief
                                        Financial Officer
Jack W. Frost                  67       President and Chief Executive Officer
                                        of J.C. Nichols Residential; Director
R. Michael Knapp               49       President and Chief Executive Officer
                                        of Iowa Realty; Director
Arne M. Rovick                 56       Vice President, Assistant General
                                        Counsel
Joseph J. Valenti              52       President and Chief Executive Officer
                                        of CBSHOME
Bradley J. DeVries             40       President and Chief Executive Officer
                                        of Paul Semonin Realtors
Stephen E. Quinlan             47       President and Chief Executive Officer
                                        of Long Realty Company
Christopher C. Coile           56       President and Chief Executive Officer
                                        of Champion Realty Inc.
Gregory E. Abel                38       Director
Richard R. Jaros(1)(2)(3)      49       Director
W. David Scott(2)(3)           39       Director

     (1)  Member of the executive committee.

     (2)  Member of the compensation committee.

     (3)  Member of the audit committee.


<PAGE>

The following sets forth  biographical  information of  HomeServices'  executive
officers, directors and key employees:

David L. Sokol has been  Chairman of  HomeServices  since its  inception in July
1999. He has also been the Chairman of  MidAmerican  Energy  Company since March
1999.  Mr. Sokol has been Chairman of  MidAmerican  Holdings  since May 1994 and
Chief Executive Officer of MidAmerican  Holdings since April 1993. He has been a
director  of  MidAmerican  Holdings  since  1991  and  served  as  President  of
MidAmerican  Holdings from April 1993 to January  1995.  Before his service with
MidAmerican Holdings,  Mr. Sokol held a variety of senior executive positions in
the independent power industry.

Ronald J. Peltier has been President and Chief Executive Officer of HomeServices
since its inception in July 1999. He was Chairman, President and Chief Executive
Officer of Edina  Realty  from 1992 to May 1999.  Mr.  Peltier  also serves as a
director  for the  National  Association  of  Realtors,  a director for the RELO
Network and is a founder and  director  for the Realty  Alliance,  a trade group
consisting of the nation's leading  brokers.  Mr. Peltier joined Edina Realty in
1977, became General Sales Manager in 1983, and became Senior Vice President and
General Manager in 1991,  where he was responsible for all sales  operations and
long-range planning for Edina Realty.

Steven A. McArthur has been Senior Vice President,  General  Counsel,  Secretary
and a director of  HomeServices  since its  inception in July 1999.  He has been
Senior  Vice  President  of  MidAmerican  Holdings  since March 1999 and General
Counsel  since  December  2000  and had  previously  served  as  Executive  Vice
President  and General  Counsel of  MidAmerican  Holdings  from February 1991 to
March 1999. From 1988 to 1991, he was an attorney in the Corporate Finance Group
at Shearman & Sterling in San Francisco.  From 1984 to 1988, Mr. McArthur was an
attorney in the Corporate Finance Group at Winthrop,  Stimson,  Putnam & Roberts
in New York.

Galen K. Johnson has been Senior Vice President and Chief  Financial  Officer of
HomeServices.com  since  September  2000. He joined the Company from Imation,  a
global technology company,  where he had been Vice President and Treasurer since
1998.  Prior to that,  he spent 18 years  with  Honeywell  and their  subsequent
spin-off company, Alliant Techsystems, in various financial management positions
including  Vice President and  Treasurer.  Mr.  Johnson  started his career with
Arthur Andersen in 1975.

Jack W. Frost has been a director of  HomeServices  since its  inception in July
1999 and President and Chief Executive Officer of J.C. Nichols Residential since
February 1, 1990. In 1978, he sold Hardin  Stockton,  a residential  real estate
brokerage firm, to Coldwell  Banker and, five years later,  became the Executive
Vice  President and National  General  Manager for Coldwell  Banker  Residential
Group serving in that  capacity  until 1988.  In 1990,  Mr. Frost  purchased the
75-year-old  residential  brokerage  operation of the J.C. Nichols Company.  Mr.
Frost  is  a  former  Commissioner  and  Chairman  of  the  Kansas  Real  Estate
Commission.

R. Michael Knapp has been a director of HomeServices since its inception in July
1999 and President and Chief Executive  Officer of Iowa Realty since 1991. Prior
to 1991,  Mr. Knapp held  numerous  positions at Iowa Realty  including  General
Sales Manager of the residential  division and Senior Vice President.  Mr. Knapp
is an active  member of  Pacesetters  and the Vision  Group,  two  organizations
comprised of the top real estate brokers and owners from across the nation.

Arne M.  Rovick  has been  Vice  President  and  Assistant  General  Counsel  of
HomeServices  since 2000.  In addition,  Mr.  Rovick has been Vice  Chairman and
General  Counsel  of Edina  Financial  Services,  Inc.  since  1986.  His  other
positions at Edina Realty  include  Chief  Administrative  Officer,  Senior Vice
President  and  Secretary.  Prior to such  time,  Mr.  Rovick  practiced  law in
Phoenix,  Arizona with the firm of Evans, Kitchel and Jenckes, P.C. In 1986, Mr.
Rovick  returned  to  Minnesota  as Vice  President,  General  Counsel for Edina
Realty.

Joseph J.  Valenti has been  President  and Chief  Executive  Officer of CBSHOME
since its formation in August 1998. He was licensed in the real estate  business
and worked as a sales  associate  and office  manager from 1976 through 1985. In
1985, Mr. Valenti and two other individuals  purchased  Wurdeman of Omaha and he
became President of the company.  In 1987, Wurdeman of Omaha was merged with two
other Omaha residential companies to form HOME Realty and he became President of
that entity. Upon the acquisition of HOME Realty and CBS Realty by HomeServices,
Mr. Valenti became the president of CBSHOME, the merged entity. Mr. Valenti is a
past  President of the Omaha Area Board of  Realtors.  He has also been a member
and chairperson of multiple local and state realtor  committees from 1979 to the
present.  Mr.  Valenti is active in the Omaha  Chamber of  Commerce  and several
charities in the Omaha area.

<PAGE>

Bradley J. DeVries has been with Paul  Semonin  Realtors  since April 1999.  Mr.
DeVries  joined Paul  Semonin in the capacity of Executive  Vice  President  and
General Manager. Mr. DeVries was promoted to the position of President and Chief
Executive Officer of Paul Semonin Realtors  effective January 1, 2001. He joined
the company from NTS Development  Company,  Kentucky's  largest  residential and
commercial  developer.  During his seven years at NTS, he held various positions
including  Vice President and President of the company's  residential  division.
From 1983 to 1992,  Mr.  DeVries  served in the United  States Marine Corps as a
pilot, earning the rank of Major.

Stephen E. Quinlan has been President and Chief Executive Officer of Long Realty
Company  since August of 1994.  From 1976 through 1994,  Mr.  Quinlan has held a
variety of  positions  at Long  Realty  Company  including  Sales  Associate  in
residential  and  commercial  areas,  Branch  Manager,   General  Manager,   and
Designated  Broker.  Mr.  Quinlan  serves  as a member of the  Cendant  Mobility
Principals  Advisory Board,  Tucson MLS Board,  Arizona  Association of Realtors
Board,  National  Association of Realtors Board and Southern Arizona  Leadership
Council. Mr. Quinlan is also a member of the Vision Group.

Chris C. Coile has been President and Chief Executive Officer of Champion Realty
Inc. since its inception  1987.  Prior to his role at Champion  Realty Inc., Mr.
Coile was sole owner and Chief  Executive  Officer of Chris  Coile &  Associates
from 1970 to 1980.  In 1980,  Chris Coile &  Associates  was acquired by Merrill
Lynch  Realty at which time Mr.  Coile  provided  a  leadership  role  including
Regional  President.  Mr. Coile has a GRI, CRS, CRB designation and was a senior
instructor for the Realtors National Marketing Institute.

Gregory E. Abel has been a director of HomeServices  since its inception in July
1999. He has been President and Chief Operating Officer of MidAmerican  Holdings
since March 1998.  Mr. Abel held  various  executive  positions  at  MidAmerican
Holdings  from 1992 to March 1999,  including  responsibility  for  engineering,
construction,  accounting and various  administrative  functions.  Mr. Abel is a
Chartered Accountant and from 1984 to 1992 was employed by Price Waterhouse (one
of the predecessor firms of PricewaterhouseCoopers  LLP) in San Francisco, where
he was responsible for clients in the energy industry.

Richard R. Jaros has been a director of HomeServices since its inception in July
1999.  Mr. Jaros has also been a director of  MidAmerican  Holdings  since March
1991. Mr. Jaros served as President and Chief  Operating  Officer of MidAmerican
Holdings  from  January 8, 1992 to April 19,  1993 and as  Chairman of the Board
from April 19, 1993 to May 1994.  Until July 1997,  Mr. Jaros was Executive Vice
President and Chief  Financial  Officer of Peter Kiewit Sons' Inc. and President
of Kiewit  Diversified  Group,  Inc., which is now Level 3 Communications.  From
1990 until January 8, 1992, Mr. Jaros served as a Vice President of Peter Kiewit
Sons'  Inc.  Mr.  Jaros  serves as a director  of  Commonwealth  Telephone,  RCN
Corporation and Level 3.

W. David Scott has been a director of  HomeServices  since its inception in July
1999.  Mr.  Scott  formed  Magnum  Resources,  Inc.,  a  commercial  real estate
investment  and  management  company,  in  October  1994 and has  served  as its
President and Chief Executive Officer since its inception. Before forming Magnum
Resources,  Mr. Scott worked for America First  Companies,  Cornerstone  Banking
Group and the Kiewit  Companies.  Mr. Scott has been a director of America First
Mortgage Investments, Inc., a mortgage REIT, since 1998.

<PAGE>

                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a)  Financial Statements and Schedules

     1.   Financial Statements

          Consolidated Balance Sheets as of December 31, 2000 and 1999.

          Consolidated  Statements  of Income for the years ended  December  31,
               2000 and 1999 and for the periods ended December 31, 1998 and May
               27, 1998.

          Consolidated  Statements  of  Changes  in  Stockholders'   Equity  and
               Comprehensive  Income for the years ended  December  31, 2000 and
               1999 and for the  periods  ended  December  31,  1998 and May 27,
               1998.

          Consolidated Statements of Cash Flows for the years ended December 31,
               2000 and 1999.

          Notes to Consolidated Financial Statements.

          Report of Independent Accountants.

     2.   Financial Statement Schedules

          Schedules not included have been omitted because of the absence of the
               conditions under which they are required.

          See  Schedule II Valuation and Qualifying Accounts and Reserves.


<PAGE>


                                   SCHEDULE II
                              HOMESERVICES.COM INC.
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>

                                         Balance at   Charged to   Charged            Balance at
                                         Beginning    costs and      to                 end of
(dollars in thousands)                   of period    expenses     reserves   Other     period
----------------------                   ----------   ----------   --------   -----   ----------

<S>                                        <C>           <C>       <C>        <C>         <C>
Year ended December 31, 2000
----------------------------
Allowance for doubtful trade accounts      $1,332        $172      $(1,118)   $   --      $  386

Year ended December 31, 1999
----------------------------
Allowance for doubtful trade accounts      $1,346        $ 87      $  (106)   $    5      $1,332

Period ended December 31, 1998
------------------------------
Allowance for doubtful trade accounts      $   --        $ 27      $    --    $1,319      $1,346

</TABLE>

          (b)  Reports on Form 8-K

               Not applicable.

          (c)  Exhibits

               The exhibits listed on the accompanying  Exhibit Index are filed
               as part of this Annual Report.

          (d)  Financial  statements  required  by  Regulations  S-X,  which are
               excluded from the Annual Report by Rule 14a-3(b).

               Not applicable.

<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized,  in the City of Edina State
of Minnesota, on this 29th day of March, 2001.

                                    HOMESERVICES.COM INC.

                                    By:  /s/ Ronald J. Peltier*
                                    -------------------------------------------
                                             Ronald J. Peltier
                                             President, Chief Executive Officer
                                               and Director

                                    By:  /s/  Galen K. Johnson*
                                    -------------------------------------------
                                              Galen K. Johnson
                                              Attorney-in-Fact

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

     Signature                                                      Date
     ---------                                                      ----


/s/  Ronald J. Peltier*                                       March 29, 2001
---------------------------
Ronald J. Peltier
President, Chief Executive
  Officer and Director

/s/  Galen K. Johnson*                                        March 29, 2001
---------------------------
Galen K. Johnson
Senior Vice President and
  Chief Financial Officer

/s/  Jack W. Frost*                                           March 29, 2001
---------------------------
Jack W. Frost
Director

/s/  R. Michael Knapp*                                        March 29, 2001
---------------------------
R. Michael Knapp
Director

/s/  David L. Sokol*                                          March 29, 2001
---------------------------
David L. Sokol
Director

/s/  Steven A. McArthur*                                      March 29, 2001
---------------------------
Steven A. McArthur
Director

/s/  Gregory E. Abel*                                         March 29, 2001
---------------------------
Gregory E. Abel
Director

/s/  Richard R. Jaros*                                        March 29, 2001
---------------------------
Richard R. Jaros
Director

/s/  W. David Scott*                                          March 29, 2001
---------------------------
W. David Scott
Director

*By:  /s/  Galen K. Johnson                                   March 29, 2001
---------------------------
Galen K. Johnson
Attorney-in-Fact


<PAGE>


                                  EXHIBIT INDEX

3.1       Certificate of Incorporation (incorporated by reference to Exhibit 3.1
          of of Amendment No. 3 to the Company's  Registration Statement on Form
          S-1, dated July 16, 1999).

3.2       Amended and Restated  Certificate of Incorporation of HomeServices.Com
          Inc.  (incorporated  by reference to Exhibit 3.3 of Amendment No. 3 to
          the Company's  Registration Statement on Form S-1, dated September 13,
          1999).

3.3       Amended and Restated Bylaws of HomeServices.Com Inc.  (incorporated by
          reference  to  Exhibit  3.4  of  Amendment  No.  3  to  the  Company's
          Registration Statement on Form S-1, dated September 13, 1999).

4.1       Specimen of Common  Stock  Certificate  (incorporated  by reference to
          Exhibit 4.1 of Amendment No. 3 to the Company's Registration Statement
          on Form S-1, dated September 13, 1999).

4.2       Form of Rights Agreement  (incorporated by reference to Exhibit 4.2 of
          Amendment No. 3 to the Company's  Registration  Statement on Form S-1,
          dated September 13, 1999).

10.1      Credit Agreement,  dated as of November 12, 1998, between  MidAmerican
          Realty Services  Company and LaSalle  National Bank  (incorporated  by
          reference to Exhibit 10.1 of the Company's  Registration  Statement on
          Form S-1, dated July 16, 1999).

10.2      Note  Purchase   Agreement  dated  as  of  November  1,  1998  between
          MidAmerican  Realty  Services  Company  and the  purchasers  listed in
          Schedule A thereto  (incorporated  by reference to Exhibit 10.2 of the
          Company's Registration Statement on Form S-1, dated July 16, 1999).

10.3      Form of Registration  Rights  Agreement  (incorporated by reference to
          Exhibit  10.3  of  Amendment  No.  3  to  the  Company's  Registration
          Statement on Form S-1, dated September 13, 1999).

10.4      Form of Services Agreement  (incorporated by reference to Exhibit 10.4
          of Amendment  No. 3 to the  Company's  Registration  Statement on Form
          S-1, dated September 13, 1999).

10.5      Form of Stock Option Plan  (incorporated  by reference to Exhibit 10.5
          of Amendment  No. 5 to the  Company's  Registration  Statement on Form
          S-1, dated October 6, 1999).

10.6      Senior,  Secured Revolving Credit Agreement by and between MidAmerican
          Realty  Services  Company,  as  borrower,  and LaSalle  Bank  National
          Association,  as a lender  and  administrative  agent  and  U.S.  Bank
          National Association,  as a lender and co-agent,  and Bank of America,
          N.A. as a lender,  dated as of  September  20, 1999  (incorporated  by
          reference  to  Exhibit  10.6  of  Amendment  No.  5 to  the  Company's
          Registration Statement on Form S-1, dated October 6, 1999).

10.7      Employment  Agreement  dated as of May 27,  1998  between  MidAmerican
          Realty  Services  Company  and  Ronald  J.  Peltier  (incorporated  by
          reference  to  Exhibit  10.7  of  Amendment  No.  3 to  the  Company's
          Registration Statement on Form S-1, dated September 13, 1999).

10.8      Employment  Agreement,  dated as of  September  1, 1998,  between J.C.
          Nichols Residential, Inc. and Jack W. Frost (incorporated by reference
          to  Exhibit  10.9 of  Amendment  No. 3 to the  Company's  Registration
          Statement on Form S-1, dated September 13, 1999).

10.9      Employment  Agreement,  dated as of May 27, 1998, between  MidAmerican
          Realty Services Company and Arne Rovick  (incorporated by reference to
          Exhibit  10.10  of  Amendment  No.  3 to  the  Company's  Registration
          Statement on Form S-1, dated September 13, 1999).

10.10     Employment  Agreement,  dated as of August 18, 1998, between Home Real
          Estate  Company  of Omaha  and  Joseph  J.  Valenti  (incorporated  by
          reference  to  Exhibit  10.11  of  Amendment  No.  3 to the  Company's
          Registration Statement on Form S-1, dated September 13, 1999).

10.11     Employment  Agreement,  dated as of May 27, 1998, between  MidAmerican
          Realty  Services  Company  and  R.  Michael  Knapp   (incorporated  by
          reference  to  Exhibit  10.12  of  Amendment  No.  3 to the  Company's
          Registration Statement on Form S-1, dated September 13, 1999).
<PAGE>

10.12     Form of Tax Indemnity Agreement.

21.0      Subsidiaries of Registrant.

24.0      Power of Attorney.