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, 1999
                           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: (612) 928-5900
                                                            --------------

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

  Title of each class                           Name of exchange
  Common Stock, $0.01                         on which registered
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 24, 2000 the aggregate  market value of the Common Stock held by
non-affiliates of the Company was $23,586,662.

         8,922,942 shares of Common Stock were outstanding on March 24, 2000.

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 10, 2000 for the Annual Meeting of  Shareholders to be held on
May 17, 2000 (the "Proxy Statement").


<PAGE>


                                TABLE OF CONTENTS

Part I.........................................................................1

ITEM 1. BUSINESS...............................................................1
   General.....................................................................1
   Recent Acquisitions.........................................................2
   Strategy....................................................................2
   Competitive Strengths.......................................................4
   Industry....................................................................4
   Sales Associates............................................................6
   Mortgage Operations.........................................................6
   Title, Escrow and Closing Services..........................................7
   Relocation Services.........................................................7
   The Hook Up(TM).............................................................8
   The Fix Up(TM)..............................................................9
   e-mortgages................................................................10
   Marketing..................................................................10
   Competition................................................................10
   Employees and Sales Associates.............................................11
   Regulation.................................................................11
ITEM 2. PROPERTIES............................................................12
ITEM 3. LEGAL PROCEEDINGS.....................................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................13

Part II.......................................................................13

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.13
ITEM 6. SELECTED FINANCIAL DATA...............................................14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  &
  RESULTS OF OPERATIONS.......................................................15
   Acquisition History........................................................15
   Overview...................................................................15
   Results of Operations......................................................16
   Results of Operations of HomeServices.Com for the year ended
  December 31, 1999...........................................................16
   Results of Operations of HomeServices.Com for the Period from
  May 28, 1998 Through December 31, 1998......................................17
   Results of Operations of Predecessor for the Period from January 1, 1998
  Through May 27, 1998........................................................18
   Liquidity and Capital Resources............................................18
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...........................20
   Consolidated Balance Sheets................................................20
   Consolidated Statements of Income..........................................21
   Consolidated Statements of Changes in Stockholders' Equity and
  Comprehensive Income........................................................22
   Consolidated Statements of Cash Flows......................................23
   Notes to Consolidated Financial Statements.................................24
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE........................................................40

Part III......................................................................41

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES.....................41

PART IV.......................................................................45
   Report of Independent Accountants..........................................45

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K...45
   Valuation and Qualifying Accounts and Reserves.............................46
SIGNATURES....................................................................47
EXHIBIT INDEX.................................................................49


<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 1998 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,  assists in securing other preclosing
and postclosing services provided by third parties, such as home warranty,  home
inspection,  home security,  property and casualty insurance,  home maintenance,
repair and remodeling and is developing  various  related  e-commerce  services.
HomeServices  currently operates primarily under the Edina Realty,  Iowa Realty,
J.C.  Nichols  Residential,  CBSHOME,  Paul  Semonin  Realtors,  Long Realty and
Champion  Realty 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, 1998.  HomeServices'  major
markets consist of the following  metropolitan areas:  Minneapolis and St. Paul,
Minnesota; Des Moines, Iowa; Omaha, Nebraska;  Kansas City, Kansas;  Louisville,
Kentucky;  Springfield,  Missouri; Tucson, Arizona and Annapolis,  Maryland. The
largest  residential real estate brokerage firm in the United States,  including
all of  its  company-owned  franchise  offices,  had  348,134  aggregate  closed
transaction sides in 1998 compared to 88,000 aggregate closed  transaction sides
in 1998 for the various  brokerage  firm  operating  subsidiaries  that comprise
HomeServices.

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 160 branch offices,  have approximately 6,350
sales associates and have operated for between 12 and 84 years,  with an average
operating  history  of  approximately  49  years  in our  major  markets.  Sales
associates  are not employees of  HomeServices,  but operate  under  independent
contractor agreements.

HomeServices is approximately  65% 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 services to HomeServices,  including management,  advisory,  financial,
accounting,  legal, 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 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 90-120 days.  According to a 1997 survey conducted for the
<PAGE>
National Association of Realtors, 78% of the recent home buyers who responded to
the  survey  stated  that the  opportunity  to handle  some or all of their home
buying  services  through their real estate  company would be appealing to them,
while 66% stated that if they had the  opportunity to redo their own home buying
experience,  they would choose a real estate  company that offers many  services
required in connection with  settlement of a home purchase,  such as real estate
listings, mortgage applications,  inspections,  appraisals,  title insurance and
legal work,  which the survey  refers to as  "one-stop  shopping."  HomeServices
provides many of the services that are  considered by the survey to be "one-stop
shopping."  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, at no cost
to its  customers,  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 and 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  experience.  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. In addition,  as  HomeServices  further  develops its e-commerce
operations, it will seek to generate banner advertising and sponsorship revenues
from its e-commerce operations.

The business of the Company is subject to various risks and uncertainties,  more
specifically  described in the  Company's  form 8-K,  dated March 17, 2000.  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 (612) 928-5900.  The Company
was incorporated in 1999 under the laws of the state of Delaware.

Recent Acquisitions

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 11 offices and
a leading market share in Louisville in terms of closed  transaction  sides, and
operations  in  Lexington,  Kentucky  and  southern  Indiana.  In  August  1999,
HomeServices acquired Long Realty, a Tucson,  Arizona real estate brokerage firm
with 12  offices  and a  leading  market  share in  Tucson  in  terms of  closed
transaction sides.

In December 1999, the Company acquired  Champion Realty, a real estate brokerage
with 14 offices  operating in the  Chesapeake  Bay and eastern shore of Maryland
region.

Growth Strategy

HomeServices'  business  objective  is  to  become  a  seamless  provider  of  a
comprehensive  menu  of  products  and  services  for  the  total  homeownership
experience,  particularly by means of e-commerce.  HomeServices' growth strategy
currently is comprised of the following elements:

Organic Growth. Based on aggregate closed transaction sides, the brokerage firms
that  comprise  HomeServices  occupy the  number one or number two market  share
position  in  each of  HomeServices'  major  markets.  HomeServices  intends  to
leverage the competitive strengths of its brokerage firms to expand the coverage
area in existing markets by opening additional offices,  hiring additional sales
associates  and engaging in  incremental  local  acquisitions.  These firms also
benefit from the sharing of  resources,  ideas and talent with the  HomeServices
family of companies and, in doing so, create additional fee income opportunities
from cross selling value-added services.  The most common of these opportunities
is mortgage  origination  and title  services.  In addition,  HomeServices  will
provide its sales associates with technological and online productivity tools to
improve and expand their business.

Selective  acquisitions.  HomeServices  intends to  continue  to expand into new
geographic  markets within the highly fragmented United States  residential real
<PAGE>
estate brokerage industry by generally  targeting the acquisition of real estate
brokerage  firms  with  the  following  primary  attributes:  local  brand  name
recognition,  significant  market share in their existing markets,  which may be
city,  state  or  regional  markets,   strong  sales  associate   relationships,
experienced operators and quality operations,  fee income upside and significant
closed  transaction  sides  volume.  HomeServices  will also  continue to pursue
opportunities  to  consolidate  two  or  more  acquired   companies  where  such
consolidation  would create a real estate brokerage firm with significant closed
transaction   volume  within  its  existing   market  while  providing  it  with
opportunities  to increase  revenues  through  cross  selling its  products  and
services.

e-commerce  products  such  as  The  Hook  Up(TM)  and  The  Fix  Up(TM).  While
HomeServices  derived less than 1% of its revenues from  third-party and related
e-commerce  products and services in 1999,  HomeServices  plans to significantly
expand  its  available  third-party   e-commerce  services  to  include  various
additional  home care  products and services  that serve the needs of homeowners
throughout the complete homeownership life cycle, including The Hook Up(TM), The
Fix Up(TM) and  additional  e-commerce  realty and nonrealty  related  services.
HomeServices  believes that by offering these additional  products and services,
it will be able to  serve  the  needs  of  homeowners  throughout  the  complete
homeownership  cycle.   HomeServices  expects  these  third-party  services  and
products to be  accessible  by telephone as well as the  Internet.  HomeServices
will  provide  these  services  to its  customers  at no cost  while  generating
advertising and services  revenues from  third-party  providers of such products
and services. In addition,  as HomeServices  continues to develop its e-commerce
operations,   HomeServices  is  seeking  to  generate  banner   advertising  and
sponsorship  revenues from its e-commerce  operations.  HomeServices  expects to
offer  the  following   types  of  services  to  new  and  existing   customers,
particularly through HomeServices' developing e-commerce platform:

         - The Hook Up(TM) assists home purchasers at and after closing. Through
         The Hook  Up(TM)  services,  HomeServices  offers  its home  buyers the
         opportunity  to obtain in a timely and efficient  manner the basic home
         services  that are  initiated at closing and are necessary to operate a
         new home.  These offerings  generally  include the following  services,
         some of which HomeServices currently provides:  local and long distance
         telephone  service,  Internet  service,  cable  television,   newspaper
         delivery,   home  security,   home  warranty,   property  and  casualty
         insurance,  electricity  and natural  gas,  waste  disposal and moving.
         Since these  services  are  necessary  to the home buyer and a consumer
         decision usually must be made by closing,  HomeServices  believes that,
         given its strong  relationship with and access to its customers,  there
         are  significant  opportunities  to  earn  revenues  by  offering  such
         services to its customers.

         -  The  Fix  Up(TM)  assists  home  purchasers  with  remodeling,  home
         maintenance and repair.  Through The Fix Up(TM),  HomeServices plans to
         offer contacts for home remodeling, maintenance and repair products and
         services  that  homeowners  generally  need  shortly  following  a home
         purchase and  throughout  the  homeownership  life cycle.  HomeServices
         intends to offer customers  contacts for quality  products and services
         such as roofing,  siding, decking,  remodeling,  windows,  landscaping,
         plumbing,  electrical,  heating,  ventilation and air  conditioning and
         painting.

         - Broad-based  e-commerce services.  Through its developing  e-commerce
         operations,  HomeServices  currently  offers  e-mortgage  and The  Hook
         Up(TM) to its existing real estate  customers and other Internet users,
         and expects to also provide third-party contacts for other products and
         services to be offered as part of HomeServices' The Fix Up(TM) program.

         -  Nonrealty  related  contacts.   HomeServices  believes  that  as  an
         extension of its The Hook Up(TM) and The Fix Up(TM)  programs,  it will
         have the  opportunity  to offer  contacts  with vendors of products and
         services that are not directly related to  homeownership.  HomeServices
         believes that these  referrals may include  entertainment,  leisure and
         recreational  activities  and consumer  products and services of a more
         general nature for its existing  realty  customer base and for Internet
         customers generally.

 While  HomeServices  currently  provides  some of these  products  and services
through  traditional  means,  such as home  warranty,  home  inspection and home
security,  it believes that as it continues to develop its e-commerce  platform,
this aspect of its business will grow proportionately.
<PAGE>

Competitive Strengths

HomeServices believes that the following competitive strengths  differentiate it
from its real estate brokerage competitors:

Long-established  presence in its markets with  well-recognized  brand names and
leading  market  shares.  While  HomeServices  was formed in May 1998,  the real
estate brokerage firms that comprise  HomeServices  have operated for between 12
and 84 years,  with an average  operating  history in excess of approximately 49
years.  These companies  occupy the number one or number two position in each of
HomeServices' major markets and enjoy strong brand name recognition,  attributes
from which HomeServices expects to benefit as it expands its service offerings.

Comprehensive range of services.  HomeServices believes that its current product
offerings position it as a full-service  provider in the residential real estate
industry.  HomeServices believes its ability to offer brokerage,  preclosing and
postclosing products and services enables it to generate incremental revenues by
cross selling services to its existing realty customer base.

Larger scale of operation than the competition.  As one of the leading companies
in the industry,  HomeServices  enjoys certain economies of scale and is able to
spread costs and  investments,  such as marketing and technology,  over a larger
revenue base. In addition, HomeServices' size permits it to offer and cross sell
efficiently  a broader  array of services  than smaller  firms and enables it to
take advantage of acquisition and consolidation opportunities.

Experienced  management.  The seven chief executive officers of HomeServices and
its real estate brokerage  subsidiaries  have between 22 and 39 years experience
in the real estate industry,  with an average of 27 years,  including leadership
positions in national realty organizations. This senior management team combines
a deep  knowledge  of  HomeServices'  local  markets  with an  understanding  of
industry  trends  and  a  proven  ability  to  identify,  effect  and  integrate
acquisitions.  They have  served as agents and  brokers as well as  managers  of
their respective firms.

Efficient  sales  associates.  HomeServices  is  dedicated  to the  recruitment,
training and retention of both new and experienced sales associates and provides
extensive  programs aimed at improving sales  associates'  marketing  skills and
increasing  their  knowledge and awareness of the issues and laws  affecting the
real estate industry.  Based on information provided by Real Trends, an industry
publication,  the productivity of the sales associates at the various  brokerage
firm operating  subsidiaries that comprise HomeServices of 15.8 aggregate closed
transaction sides per sales associate in 1998 compares  favorably to an industry
average  of 13.2  for  the top 500  residential  real  estate  brokerage  firms,
excluding  HomeServices.  HomeServices  believes the  productivity  level of its
sales  associates is among the highest in the industry based on aggregate closed
transaction sides. HomeServices intends to continue to recruit additional highly
qualified sales  associates,  targeting,  in particular,  sales  associates with
experience  in the real estate  industry  and  longstanding  relationships  with
third-party  service providers within the community.  Since January 1, 1999, the
brokerage  firm operating  subsidiaries  that comprise  HomeServices  have added
approximately 298 sales associates to the HomeServices branch network.

Industry

HomeServices  believes that the residential real estate industry has undergone a
period of continued  growth  which,  combined with certain  characteristics  and
trends creates an opportunity for  HomeServices to leverage its strengths to its
competitive  advantage.  HomeServices  believes  the  most  important  of  these
industry characteristics and trends are:

Fragmentation.  The residential real estate brokerage industry remains primarily
a local and highly fragmented  industry.  According to Real Trends, in 1998, the
companies  comprising  HomeServices and the other top four  residential  brokers
accounted for only 5.2% of the total national market based on closed transaction
sides,  while the top 500 firms  accounted  for less  than  20.0%.  HomeServices
believes this fragmentation presents it with numerous acquisition opportunities.

Emergence  of the  Internet.  In the real  estate  and  mortgage  business,  the
Internet is fast becoming a major marketing  tool.  According to a report issued
<PAGE>
by Strategic  Planning  Services,  mortgage  originations  over the Internet are
expected to grow from $4.1 billion in 1998 to nearly  $100.8  billion by 2003 as
customers recognize the convenience and benefits of shopping for and refinancing
their  mortgages and home equity loans  on-line.  HomeServices  believes that in
addition to marketing its traditional residential brokerage,  mortgage and title
services  on-line,  the Internet  provides it with significant  opportunities to
offer The Hook  Up(TM) and The Fix  Up(TM)  services.  As part of its  strategy,
HomeServices  will seek to attract  Internet  customers  outside of its existing
realty customer base by providing a broad array of e-commerce  offerings,  which
may be  tailored  to the  local or  regional  markets  in which it  operates  or
provided on a more expansive basis.

Size and Recent Growth of Market.  Based on information reported by the National
Association of Realtors and the United States Census  Bureau,  the 1998 domestic
residential real estate market for existing and new home sales consisted of more
than 11.7 million  transaction  sides,  representing more than $950.0 billion in
aggregate closed  transaction  value.  Closed  transaction  value represents the
gross sales price for a closed home purchase and is a standard measure of market
size. In recent years, the overall  domestic  residential real estate market has
demonstrated continued growth in home sales and rising home prices. According to
the National Association of Realtors,  sales of existing  single-family homes in
the Midwest  reached 1.2 million in 1998,  which  represents  an average  annual
growth rate of 5.6% since 1990. In addition, the sales growth has accelerated in
recent years, as evidenced by average annual growth of 7.0% since 1995. In 1998,
the Midwest regional median price for existing single-family homes was $114,300,
which represents an average annual increase of 6.8% from 1990.

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;

         *     advertising 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.

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.
<PAGE>

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 67.5% over the past three years.

Sales Associates

HomeServices  had  approximately  6,350 sales associates as of December 31, 1999
after  giving  effect to the Paul  Semonin  Realtors,  Long Realty and  Champion
Realty  acquisitions.  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.  Sales  associates  will be  eligible  to  participate  in
HomeServices'   non-employee   stock  purchase  plan.   Sales   associates  have
participated  in  prior  stock  purchase  plans   maintained  on  their  behalf.
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. While industry results vary widely, from 1996 to 1999, the
annual productivity of the sales associates employed by the individual companies
that comprise HomeServices  increased by 10% from 14.0 to 15.4 transaction sides
per sales associate,  based on closed  transaction  sides for sales  associates,
which  HomeServices  believes  is  the  optimal  indicator  of  sales  associate
productivity.   HomeServices  believes  the  productivity  level  of  its  sales
associates is among the highest in the industry.

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.
<PAGE>
HomeServices   currently  provides  a  substantial  portion  of  these  mortgage
origination  services through a residential  joint venture with Norwest Mortgage
Inc., a subsidiary of Norwest Bank 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 Norwest Mortgage.
The joint venture employs loan  originators and supervisory  staff and purchases
processing,  underwriting  and closing services from Norwest  Mortgage.  Under a
services  agreement  between  Norwest  Mortgage and the joint  venture,  Norwest
Mortgage  provides these services and is reimbursed by the joint venture for the
costs  incurred on comparable  terms to those Norwest  Mortgage is reimbursed by
its own loan  production  offices.  Profits  earned by the joint  venture  after
payment of the amounts owed to Norwest  Mortgage  which amount  varies,  and all
other  expenses  are then  divided  equally  between  HomeServices  and  Norwest
Mortgage.  Since  Norwest  Mortgage  underwrites  and  services  the  mortgages,
HomeServices  retains none of the servicing  responsibilities or liabilities for
the  mortgages  it  originates  and Norwest  Mortgage  bears the losses from any
failure by a  mortgagor  to pay  principal,  interest or other  amounts  under a
mortgage.

Plaza Mortgage,  a wholly owned  subsidiary of J.C.  Nichols  Residential,  also
originates,  processes,  underwrites  and  closes  mortgages.  Plaza  Mortgage's
underwriting  loan  commitments are  contractual  obligations in its own name to
mortgage  loan  applicants.  Before  underwriting  the  loan  commitment,  Plaza
Mortgage  performs a credit  analysis  to  confirm  that the loan would meet the
particular guidelines  established by several investors with whom Plaza Mortgage
has  established  relationships.  Prior to closing with the mortgage  applicant,
Plaza  Mortgage  obtains a commitment  that an investor  will  purchase the loan
after the closing at an agreed upon price on the  condition  that the loan meets
the investor's particular investment  guidelines.  Plaza Mortgage then sells the
mortgage,  typically  within two weeks,  to the investor and,  after it is sold,
retains no service rights or interest  carrying  costs.  During the period after
Plaza Mortgage closes the loan and before it sells the mortgage to the investor,
Plaza  Mortgage would incur the cost or obtain the benefits if the interest rate
paid by  HomeServices  on  borrowings  made by it to fund the loan at closing is
higher or lower than the interest rate paid on the mortgage by the mortgagee.

On a pro  forma  basis  for the  year  ended  December  31,  1999,  HomeServices
originated approximately $835.2 million in mortgages, of which approximately 66%
represented mortgages originated by HomeServices through its joint venture  with
Norwest Mortgage, 15% represented mortgages originated and underwritten by Plaza
Mortgage  and  approximately  19%  represented   mortgages   originated  through
relationships  with  other  partners.  On a pro forma  basis for the year  ended
December  31,  1998 and the year ended  December  31,  1999  approximately  $2.8
million and $3.4 million, respectively, of HomeServices' revenues were generated
by its mortgage operations.

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 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. A total of approximately 30%
of title,  escrow and  closing  revenues  have come from  transactions  in which
HomeServices  is not the real estate  broker.  On a pro forma basis for the year
ended  December 31, 1998 and the year ended  December  31,  1999,  approximately
$26.0 million and $24.9 million of HomeServices'  revenues were generated by its
title, escrow and closing services.

Relocation Services
<PAGE>

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.  On a pro forma
basis for the year ended December 31, 1998 and the year ended December 31, 1999,
HomeServices  generated  approximately $258,000 and $450,000,  respectively,  in
fees for relocation services.

The Hook Up(TM)

HomeServices believes that it will be able to effectively provide 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),  at no cost to the
customers.  The Hook Up(TM)  program  arranges for the  initiation at closing of
basic home services necessary to the home buyer, such as local and long-distance
telephone  service.  HomeServices  believes it is especially  well-positioned to
offer The Hook Up(TM),  on a targeted basis, to its captive  buy-side  customers
with whom it has developed relationships during the home purchasing experience.

HomeServices has begun to offer third-party  products and services under the The
Hook Up(TM) program through Edina Realty,  Long Realty and CBSHOME.  The program
is  expected  to  be  implemented  at  other  existing  HomeServices   brokerage
operations in 2000.  HomeServices is currently offering third-party products and
services for the following through The Hook Up(TM) services:

         *     local and long distance telephone service;

         *     Internet service account establishment;

         *     cable television account establishment;

         *     newspaper delivery;

         *     home security, including monthly monitoring;
<PAGE>

         *     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 in several of its
brokerage  subsidiaries,  also  through  The Hook Up(TM)  program.  HomeServices
intends to make these  Services  available to all its existing  realty  customer
base and Internet customers generally 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.  On a pro forma basis for
the year  ended  December  31,  1998  and the  year  ended  December  31,  1999,
approximately  $805,000 and $1,224,000 of HomeServices'  revenues were generated
by basic home connection  services,  either through traditional means or through
the Internet.  HomeServices plans to significantly  expand the types of services
that it provides and expects to derive a greater  percentage  of its revenues in
the future from The Hook Up(TM) services.

The Fix Up(TM)

As part of  promoting a "one-stop  shopping"  experience  for its  customers  at
closing and throughout the seven-year homeownership cycle, HomeServices plans to
provide to its existing customers and to Internet customers  generally,  through
e-commerce,  at no cost, referrals for house maintenance,  repair and remodeling
related  products and services.  These products and services will be provided by
third-party  providers.  HomeServices believes that The Fix Up(TM) services will
assist  a new  homeowner  through  each  stage  of the  homeownership  cycle  by
simplifying their search process for third-party service providers. HomeServices
intends to screen and monitor these third-party service providers to ensure that
they meet pre-established  quality performance standards,  although HomeServices
does not intend to make any contractual  representations  to customers as to the
quality  performance of these providers or to guarantee their  performance.  The
third-party providers are expected to offer services such as:

         *     roofing;

         *     siding;

         *     decking;

         *     remodeling;

         *     windows;

         *     landscaping;

         *     plumbing;

         *     electrical;

         *     heating, ventilation and air conditioning; and
<PAGE>

         *     appliances.

In  exchange  for  connecting  its  existing   customers  to  these  third-party
providers,  HomeServices  will receive service fees from the actual  third-party
providers. HomeServices plans to make The Fix Up(TM) services accessible through
the Internet as part of its e-commerce operations. HomeServices believes it will
generate  revenues  from banner  advertising  on its websites in addition to the
other service fees it receives.

e-mortgages

As a part of its  e-commerce  operations,  HomeServices  intends to offer to its
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 mortgage  origination  services but intends to
transition  more of these services  on-line  through  e-mortgages.  HomeServices
believes its e-commerce  operations will position it to earn banner  advertising
revenues from its websites in addition to the fee-based origination.

Marketing

HomeServices markets its real estate brokerage, mortgage origination,  insurance
and other ancillary services through a multimedia program. This program includes
advertising through major area and local newspapers,  the Internet,  real estate
publications,  radio,  television,  catalogs and direct mail.  HomeServices also
promotes its websites and  e-commerce  offerings  through  these media  outlets.
HomeServices'   advertising   and  marketing   expenses  vary  based  on  closed
transaction  volume and are funded both  through  commission  revenue  earned by
HomeServices and a marketing fee paid by sales  associates to  HomeServices.  In
1998 and 1999,  on a pro forma basis,  HomeServices  incurred  $19.1 million and
$19.0 million, respectively, in business promotion and advertising expense.

HomeServices'  individual  sales  associates  also  often  market  HomeServices'
business through similar  marketing tools as HomeServices.  Sales associates are
responsible for purchasing the marketing tools they use in their business.

HomeServices  believes  that it can attract  Internet  customers  outside of its
existing realty customer base by providing a broad array of e-commerce services.
These e-commerce  services,  which currently include e-mortgages and third-party
contacts for home  warranty,  home  security,  home  inspection and property and
casualty insurance and will include additional  products and services offered as
a part of HomeServices'  The Hook Up(TM) and The Fix Up(TM),  may be tailored to
the local or  regional  market in which  HomeServices  operates or provided on a
more expansive basis.  HomeServices intends to market its e-commerce service and
product  offerings,  particularly  through  on-line  advertising  and reciprocal
hyperlinks to other  websites that are likely to attract  potential home buyers.
HomeServices  believes  that it has  already  established  an  on-line  presence
through  its  own  website  and  the  websites  of its  brokerage  subsidiaries.
HomeServices  has already  established a hyperlink with  Realtor.com,  a leading
Internet real estate website.  In addition,  certain of HomeServices'  brokerage
firm operating  subsidiaries  have  established  hyperlinks with Realtor.com and
HomeAdvisor.com, another leading Internet real estate website, and with websites
of local newspapers in HomeServices'  existing markets.  These hyperlinks enable
HomeServices and its brokerage firm operating  subsidiaries to access both their
existing  customers and Internet  customers  generally  without  having to incur
significant advertising expense.

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, including Weichert Realtors, Long
& Foster and GMAC, and a multiregional  player,  NRT  Incorporated.  The largest
residential  real estate  brokerage firm in the United States,  including all of
its company-owned  franchise  offices,  had 348,134 aggregate closed transaction
sides in 1998 compared to 88,000 aggregate closed  transaction sides in 1998 for
the various brokerage firm operating  subsidiaries  that comprise  HomeServices.
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
co-owned stores.
<PAGE>

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,  such as Coldwell  Banker
Burnet and J. D. Reece Realtors, as well as local single office independent real
estate organizations.  HomeServices also competes nationally with franchise real
estate  organizations,  such as RE/MAX franchises,  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.  HomeServices believes that its
major  competitors  in 1999 in the  acquisition  of other real estate  brokerage
businesses will be franchise organizations, such as NRT Incorporated and GMAC.

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  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,  such as the yellow pages. However,
these  competitors,  unlike  HomeServices,   typically  do  not  have  a  direct
relationship with the customer.

In the  e-commerce  business  more  generally,  HomeServices  will  compete with
Internet websites such as Realtor.com and  Homestore.com  that provide access to
similar products or services.  HomeServices  believes it will have 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, 1999,  HomeServices employed  approximately 1,575 individuals
and had approximately  6,350 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.

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
<PAGE>

         *     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.

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 46,000 square feet of office space. This lease
expires in 2003. The rent under this lease is  approximately  $600,000 per year.
In addition,  HomeServices has a total of 160 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 and its subsidiaries taken as a whole.

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,"
The  high and low last  reported  sale  prices  of the  Common  Stock in the 4th
Quarter of 1999, since the initial public offering of Common Stock on October 8,
1999, was $16.50 and $14.50.

On March 24, 2000,  the last  reported sale price of the Common Stock was $11.00
per share. As of March 24, 2000,  there were  approximately 84 holders of record
of the Common Stock.

HomeServices'  predecessor  paid cash dividends on its common stock of $0.19 per
share in 1997.  HomeServices  did not pay any cash dividends on the common stock
during 1998 or 1999. 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 periods  ended  December  31, 1999 and 1998 and May 27,  1998.
(dollars in thousands except per share amounts)
<TABLE>
<CAPTION>

                                                                    Company                                    Predecessor
                                     --------------------------------------------------------------- ----------------------------
                                     Year Ended December 31, 1999  May 28 Through December 31, 1998  January 1 Through May 27,1998
                                     ----------------------------  --------------------------------  ----------------------------
Statement of Income Data:
Commission revenue
<S>                                          <C>            <C>           <C>              <C>             <C>          <C>
Title Fees                                     21,313         5.4%          14,154           7.4%           7,575         8.8%
Other                                          16,854         4.3%           6,790           3.6%           3,769         4.4%
                                               ------         ----           -----           ----           -----         ----
   Total Revenues                             393,291       100.0%         190,591         100.0%          86,237       100.0%
                                              -------       ------         -------         ------          ------       ------

Commission expense                            246,475        62.7%         113,225          59.4%          49,107        56.9%
Amortization of pending real estate             3,088         0.8%          18,271           9.6%               -            -
Depreciation and amortization                   8,881         2.3%           4,177           2.2%           2,293         2.7%
All other operating expenses                  118,042        30.0%          59,265          31.1%          31,126        36.1%
                                              -------        -----          ------          -----          ------        -----
Total operating expenses                      376,486        95.8%         194,938         102.3%          82,526        95.7%
                                              -------        -----         -------         ------          ------        -----
Operating income (loss)                        16,805         4.2%          (4,347)        (2.3%)           3,711         4.3%
Other income (expense), net                    (3,128        (0.8%)         (1,334)        (0.7%)             (94)       (0.1%)
Income (loss) before income taxes              13,677         3.4%          (5,681)        (3.0%)           3,617         4.2%
Income tax expense (benefit)                    6,025         1.5%          (2,247)        (1.2%)           1,664         1.9%
                                                -----         ----           ------        ------           -----         ----
Net income (loss)                             $ 7,652         1.9%        $ (3,434)        (1.8%)          $1,953         2.3%
                                              =======         ====           ======        ======          ======         ====
Net income (loss) per share-basic and         $  0.96                     $  (0.51)                        $ 0.41

Balance Sheet Data:

Cash and cash equivalents                     $10,318                       $3,114
Total assets                                 $166,658                     $128,520
Long term debt including current portion     $ 48,817                      $61,445
Stockholders' Equity                         $ 82,352                      $35,194
</TABLE>



<PAGE>


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

Acquisition History

HomeServices.Com  Inc., as successor by merger to  MidAmerican  Realty  Services
Company,  entered the real estate  brokerage  business in May 1998 by  acquiring
Iowa Realty and Edina  Realty,  both  formerly part of AmerUs Home Services Inc.
Iowa  Realty  operates  in Iowa and  Missouri,  and  Edina  Realty  operates  in
Minnesota, Wisconsin, North Dakota and South Dakota. In August 1998, the Company
expanded  its  business  with  the  purchases  of two  established  real  estate
brokerage firms in Omaha, Nebraska,  HOME Real Estate and CBS Real Estate, which
were merged to form CBSHOME Real Estate. In September 1998, the Company acquired
J.C. Nichols Residential,  a brokerage firm operating in the greater Kansas City
area. In December 1998, the Company acquired Nebraska Land Title & Abstract. The
Company acquired Paul Semonin  Realtors,  a real estate brokerage firm operating
in Kentucky  and southern  Indiana in July 1999 and Long  Realty,  a real estate
brokerage  firm  operating  in  southern  Arizona in August  1999.  The  Company
concluded the  acquisition  of Champion  Realty,  a real estate  brokerage  firm
operating in Maryland, in December 1999.

Overview

Revenues.  The Company's commission revenue consists of sales commissions earned
by  providing  real estate  brokerage  services to customers in the purchase and
sale  of  new  and  existing  homes.  Sales  commissions  typically  range  from
approximately 5% to 7% of the sales price and may be shared between the seller's
broker and the buyer's broker. In transactions in which the Company is acting as
a  broker  on  either  the buy  side or the  sell  side of a  transaction  and a
third-party  broker is acting as a broker on the other side of the  transaction,
the Company will, in most instances, share approximately 40% to 50% of the sales
commission with the third-party  broker. In transactions in which the Company is
acting as the sole broker,  the Company  receives 100% of the sales  commission.
Commission  revenue is recorded  upon the closing of the home sale  transaction.
For  the  year  ended  December  31,  1999,   commission   revenue   represented
approximately 90% of total revenues.

In addition,  to a lesser extent, the Company earns fee revenue by providing the
following services:

         o     Title services,  including title insurance,  title search, escrow
               and other closing administrative  services, for which the Company
               receives a fee from the home buyer or seller -  approximately  6%
               of total revenues for the year ended December 31, 1999;

         o     Mortgage  origination  services  for which the  Company  receives
               various fees -  approximately  1% of total  revenues for the year
               ended December 31, 1999;

         o     Relocation services for corporate customers;  franchise services,
               and  advertising  services to third party  providers of home care
               related  services -  approximately  3% of total  revenues for the
               year ended  December  31,  1999.  Franchise  services  entail the
               Company  providing third parties with the right to use any one of
               its brand names in  connection  with the  residential  activities
               conducted  by such  third  parties,  and for  which  the  Company
               receives a fee from such third parties.

Revenue  derived from title and other  services are  recognized at the time that
the services are performed.

A substantial portion of the Company's revenue has been derived from traditional
real estate brokerage services.  While the Company has not presently derived any
significant  revenues  from its  e-commerce  operations,  it expects that in the
future,  a larger  percentage of its revenue will be derived from services other
than  traditional  real estate  brokerage  services as the Company  develops its
e-commerce platform.

Expenses.  Commission expense represents commissions paid to the Company's sales
associates and is based on a percentage of the sales  commissions  earned by the
Company.  Typically, the percentage of the sales commissions that is paid to the
Company's  sales  associates  will vary based on such factors 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 the Company or its
predecessors have paid to sales associates was approximately 69.4% of commission
revenue for the year ended  December 31, 1999.  Similar to  commission  revenue,
commission expense is recorded upon the closing of the home sale transaction.

Amortization  of pending  real estate sales  contracts  is the  expensing of the
value of real estate sales contracts that are pending when real estate brokerage
firms are acquired.  Upon the acquisition of real estate  brokerage  firms,  the
<PAGE>
Company  establishes  an  asset  for the  value of  pending  real  estate  sales
contracts.  The Company  amortizes  pending real estate sales contracts over the
three-month  period  subsequent to an  acquisition,  reflecting  the period over
which the Company  estimates  that such  contracts  result in closed real estate
transactions.

Each director of the Company has 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 Service  Company,  in the merger of
HomeServices  and  MidAmerican  Realty  Service  Company on October 7, 1999. The
Company  took a  one-time  non-cash  after  tax  charge  against  net  income of
approximately  $2.2  million  in the  fourth  quarter  of 1999  related to these
options.

All other operating  expenses consist  primarily of the following:  (1) salaries
and employee benefits paid to employees,  which excludes sales  associates;  (2)
occupancy  costs,  such  as rent  and  utilities;  (3)  business  promotion  and
advertising    costs;    and   (4)   other   operating    expenses,    including
telecommunications,  office  supplies,  professional  and  management  fees, and
corporate charges for services provided by MidAmerican  Holdings,  the holder of
approximately 65% of HomeServices.Com's common stock.

Results of Operations

Results of operations of the Company are significantly  influenced by the timing
of the entities  acquired as described above. 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 is subject to seasonal fluctuations
because  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  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, 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 later 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  and new  subsidiaries
acquired.

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.  The Company
amortizes goodwill over its projected useful life of 30 years on a straight-line
basis.

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.
<PAGE>

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.  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

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 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,  and Champion Realty from the dates of
acquisition through December 31, 1999.

Earnings Before Interest,  Taxes, Depreciation and Amortization (EBITDA) for the
twelve months ended December 31, 1999 is $28.8 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 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.  Other revenues  include escrow and closing
revenue,  mortgage  service fee income,  franchise fees,  relocation and service
provider generated revenue and various other 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 period 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.

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.
<PAGE>

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.  Other
revenues  include  escrow and  closing  revenue,  mortgage  service  fee income,
franchise fees,  relocation and service provider  generated  revenue and various
other 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  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 $10.3 million and $3.1 million at
December  31,  1999 and 1998,  respectively.  On October 14,  1999,  the Company
closed the initial  public  offering of its common  stock.  Net  proceeds to the
Company from the offering were approximately $27.1 million.

The Company's  cash provided by operating  activities  was $33.1 million for the
year ended December 31, 1999,  $12.4 million for the period May 28, 1998 through
December  31, 1998 and $5.0  million for the period  January 1, 1998 through May
27, 1998. The increase in 1999 is due primarily to the significant  acquisitions
over the last two years.

The Company's  cash used in investing  activities was $46.6 million for the year
ended  December  31,  1999,  $99.1  million for the period May 28, 1998  through
December  31, 1998 and $0.9  million for the period  January 1, 1998 through May
27, 1998.  The Company's  cash used in investing  activities  for the year ended
1999 was primarily a result of the acquisitions of Paul Semonin  Realtors,  Long
Realty,  and Champion Realty for a combined $36.8 million,  net of cash and cash
equivalents  acquired.  The Company's cash used in investing  activities for the
1998 periods was primarily a result of the  acquisitions  of Iowa Realty,  Edina
Realty,  Home Real  Estate,  CBS Real  Estate,  J.C.  Nichols  Residential,  and
Nebraska  Land  Title &  Abstract  for a  combined  $96.5  million,  net of cash
acquired.
<PAGE>

The Company's cash provided by (used in) financing  activities was $20.7 million
for the year ended December 31, 1999,  $89.8 million for the period May 28, 1998
through  December  31, 1998 and $(1.9)  million  for the period  January 1, 1998
through May 27, 1998.  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.  The Company's
cash  provided  by (used  in)  financing  activities  for the 1998  periods  was
primarily a result of capital  contributions,  loans from MidAmerican  Holdings,
and advances under the revolving credit agreement.

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, 1999 and 1998,  there were no borrowings under
this  agreement.  The interest  rate on  borrowings is equal to the 30-day LIBOR
rate (5.8% on December 31, 1999) plus 1%. 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,
1999,  the  blended  average  interest  rate on the  revolving  credit  facility
borrowings of $11 million was 8.1%.

The Company  believes  that the net proceeds  that it received  from its initial
public offering of common stock, together with its cash flow from operations and
available  borrowings under its $75 million  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.  If,  however,  net  proceeds  from the  offering  and cash  flow from
operations  and borrowings  under the Company's  revolving  credit  facility are
insufficient  to satisfy the Company's  liquidity  requirements,  it may 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, which is based on LIBOR rates, by entering
into interest rate swap agreements.  The swap  arrangements  effectively fix the
interest  rate for that  portion  of the  variable  debt.  The fair value of the
interest rate swap at December 31, 1999 was $346,000. Assuming a 10% increase in
interest rates, the fair value of the swap agreement would have been $426,000 at
December 31, 1999. 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)
<TABLE>
<CAPTION>

                                                                                             as of December 31,
                                                                                     --------------------------------
                                                                                          1999             1998
                                                                                     ---------------   --------------
<S>                                                                                   <C>              <C>
Assets
Current Assets:
Cash and cash equivalents                                                             $  10,318        $   3,114
Commissions and other trade receivables, net of allowance of $1,332 and $1,346            7,077            3,937
Mortgage loans held for sale                                                              2,974           13,383
Pending real estate sales contracts                                                         673                -
Cash held in trust                                                                        6,549            7,932
Income taxes receivable                                                                     534            3,902
Other current assets                                                                      3,236            2,143
                                                                                      ---------------  --------------
     Total current assets                                                                31,361           34,411
                                                                                      ---------------  --------------
Other Assets:
Office property and equipment, net                                                       22,943           15,453
Intangible assets, net                                                                  106,706           75,122
Investments in non-consolidated entities                                                    845              269
Held-to-maturity securities                                                                 944              651
Available-for-sale securities                                                               264              297
Restricted assets                                                                           255                -
Deferred income taxes                                                                     2,679            2,148
Other assets                                                                                661              169
                                                                                      ---------------  --------------
     Total other assets                                                                 135,297           94,109
                                                                                      ---------------  --------------
Total Assets                                                                          $ 166,658        $ 128,520
                                                                                      ===============  ==============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts and commissions payable                                                      $   7,172        $   5,448
Accrued expenses                                                                         12,668           11,345
Payable to affiliates                                                                     1,042              367
Cash held in trust                                                                        6,549            7,932
Current portion of long-term debt                                                           707            3,436
Other current liabilities                                                                   862            1,624
                                                                                      ---------------  --------------
     Total current liabilities                                                           29,000           30,152
                                                                                      ---------------  --------------
Other Liabilities:
Long-term debt                                                                           48,110           58,009
Agent profit-sharing                                                                      6,282            5,074
Other noncurrent liabilities                                                                914               91
                                                                                      ---------------  --------------
     Total other liabilities                                                             55,306           63,174
                                                                                      ---------------  --------------
     Total liabilities                                                                   84,306           93,326
                                                                                      ---------------  --------------
Commitments and contingencies (Note 13)

Stockholders' Equity:
Common stock,  $0.01 par value,  38,000,000  shares  authorized;  10,422,942 and
    6,778,700  shares  issued and  outstanding  at  December  31, 1999 and 1998,
    respectively                                                                            104               68
Additional paid-in capital                                                               78,705           39,447
Notes receivable                                                                           (651)            (896)
Accumulated other comprehensive (loss) income                                               (24)               9
Retained earnings (accumulated deficit)                                                   4,218           (3,434)
                                                                                      ---------------  --------------
     Total stockholders' equity                                                          82,352           35,194
                                                                                      ---------------  --------------
Total Liabilities and Stockholders' Equity                                            $ 166,658          128,520
                                                                                      ===============  ==============
</TABLE>


         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       Through         Through
                                                            December 31,   December 31,      May 27,
                                                               1999            1998            1998
                                                          ------------------------------------------------
<S>                                                       <C>             <C>            <C>
Revenues:
Commission revenue                                        $ 355,124       $ 169,647      $  74,893
Title fees                                                   21,313          14,154          7,575
Other                                                        16,854           6,790          3,769
                                                          ---------       ---------      ---------
Total revenues                                              393,291         190,591         86,237
                                                          ---------       ---------      ---------
Operating expenses:
Commission expense                                          246,475         113,225         49,107
Salaries and employee benefits                               58,075          27,603         14,620
Occupancy                                                    19,189           9,081          5,564
Business promotion and advertising                           16,543           8,632          5,184
Other operating expenses                                     24,235          13,949          5,758
Amortization of pending real estate sales contracts           3,088          18,271              -
Depreciation and amortization                                 8,881           4,177          2,293
                                                          ---------       ---------      ---------
 Total operating expenses                                   376,486         194,938         82,526
                                                          ---------       ---------      ---------
Other income (expense):
Interest income                                               1,006             595            169
Interest expense                                             (4,134)         (1,929)          (263)
                                                          ----------      ----------     ----------
Total other income (expense), net                            (3,128)         (1,334)           (94)
Income (loss) before income taxes                            13,677          (5,681)         3,617
Income tax expense (benefit)                                  6,025          (2,247)         1,664
                                                          ---------       ----------     ---------
Net income (loss)                                         $   7,652       $  (3,434)     $   1,953
                                                          ========================================
Net income (loss) per share:
Basic and diluted                                         $    0.96       $   (0.51)     $    0.41
                                                          ========================================

Weighted average shares outstanding - Basic                   7,956           6,779          4,748
                                                          ========================================
Weighted average shares outstanding - Diluted                 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   Retained
                                           Common Stock      Additional               Other      Earnings
                                       ---------------------
                                                               Paid-in     Notes  Comprehensive (Accumulated
                                         Shares     Amount     Capital  Receivable Income (Loss)  Deficit)     Total
                                       --------------------------------------------------------------------------------
<S>                                    <C>        <C>        <C>        <C>        <C>         <C>          <C>
Predecessor:
Balance, January 1, 1998                4,758,850 $    47    $ 31,665   $      -   $      -    $  5,079     $   36,791
Net and comprehensive 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
       (gross $15, net of $6 taxes)                                                       9                          9
                                                                                                            ------------
Total comprehensive loss                                                                                        (3,425)
Allowance for 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
   (gross $55, net of $22 taxes)                                                        (33)                       (33)
                                                                                                            ------------
Total comprehensive income                                                                                       7,619
Allowance for 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
                                       =================================================================================
</TABLE>

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

                              HOMESERVICES.COM INC.
                      Consolidated Statements of Cash Flows
                             (dollars in thousands)
<TABLE>
<CAPTION>
                                                                  Company            Predecessor
                                                        -----------------------------------------
                                                                       May 28, 1998  January 1, 1998
                                                         Year Ended       Through       Through
                                                         December 31,  December 31,      May 27,
                                                            1999          1998            1998
                                                        ------------------------------------------
Cash flows provided by operating activities:
<S>                                                     <C>           <C>           <C>
Net income (loss)                                       $  7,652      $  (3,434)    $   1,953
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
  Depreciation and amortization                            8,881          4,177         2,293
  Amortization of pending real estate sales contracts      3,088         18,271             -
  Earnings from equity method investments                   (480)             -             -
  Loss (gain) on sale of office property and equipment       121            197            (6)
  Decrease in notes receivable                               245            630             -
  Provision for deferred income taxes                       (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                       (3,122)             -          (281)
     Mortgage loans held for sale                         10,409         (7,287)            -
     Income taxes receivable                               3,368             (5)            -
     Other assets                                          1,659            728         1,252
     Payable to affiliates                                   704              -             -
     Agent profit sharing                                  1,208          1,169          (164)
     Accounts payable, accrued expenses and
      other liabilities                                   (3,808)           206          (135)
                                                        ------------------------------------------
Net cash provided by operating activities                 33,054         12,428          4,991
                                                        ------------------------------------------
Cash flows used in investing activities:
  Purchases of companies, net of cash and cash
    equivalents                                          (36,820)       (96,478)             -
  Purchases of office property and equipment              (9,396)        (2,650)          (900)
  Other investing                                           (353)             2              9
                                                        -------------------------------------------
Net cash used in investing activities                    (46,569)       (99,126)          (891)
                                                        -------------------------------------------
Cash flows provided by (used in) financing activities:
  Issuance of common stock in public offering,
    net of expenses                                       27,149              -              -
  Payments of long-term debt                             (32,084)        (7,753)          (872)
  Proceeds from long-term debt                            31,647         35,000              -
  Net change in revolving credit facility                (14,000)        25,000              -
  Proceeds from capital transactions                       8,501         37,990              -
  Distributions and dividends paid to parent                   -              -         (1,068)
  Loan costs                                                (494)          (425)             -
                                                        -------------------------------------------
Net cash provided by (used in) financing activities       20,719         89,812         (1,940)
                                                        -------------------------------------------
Net increase in cash and cash equivalents                  7,204          3,114          2,160
Cash and cash equivalents at beginning of period           3,114              -          2,590
                                                        -------------------------------------------
Cash and cash equivalents at end of period              $ 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.  The Company is  currently  owned  approximately  65% by  MidAmerican
Energy Holdings Company ("MidAmerican Holdings").

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 generally  accepted
accounting principles 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

For purposes of reporting cash flows, cash and cash equivalents include cash and
short-term  investments  purchased  with  maturities  of three  months  or less,
excluding cash held in trust.

Supplemental disclosure of cash flow information (in thousands) -

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

Cash paid for interest        $      4,269    $    1,292             $      695
Cash paid for taxes           $      3,188    $    4,258             $    1,648

Supplemental   schedule  of  noncash  investing  and  financing  activities  (in
thousands) -

                                            Company                 Predecessor
                               -----------------------------        -----------
                                                May 28, 1998    January 1, 1998
                                  Year Ended      Through           Through
                             December 31, 1999 December 31, 1998  May 27, 1998
                             ----------------- ----------------- -------------
Purchase of property and equipment
    through capital leases        $  345               -                 -
Acquisition payment in accounts
    payable                            -         $   919                 -
Common stock issued to minority
    shareholders                       -         $ 1,525                 -

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.
<PAGE>

Investment in marketable securities

Marketable   debt   securities   are   classified   as   available-for-sale   or
held-to-maturity.  Management determines the appropriate  classification of debt
securities   at  the  time  of   purchase.   Debt   securities   classified   as
available-for-sale  are stated at fair value,  with unrealized  gains and losses
reported in a separate  component of  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.

Certain investments in equity securities are accounted for as available-for-sale
securities  and  adjusted  to market  value with  unrealized  gains or  (losses)
reported as a separate component of stockholders' equity.

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.

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 the excess cost over acquired net assets  (goodwill),
which has been  capitalized and is being amortized on a straight line basis 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.

Cash 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.  At  December  31,  1999 and 1998,  the  Company  held
approximately $6.5 million and $7.9 million, respectively, of funds in trust.

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.

Earnings Per Share

Diluted  earnings per share amounts are based upon the weighted  average  shares
outstanding  during  the  periods.  The  difference  between  basic and  diluted
weighted  average  shares  outstanding  for the year ended  December 31, 1999 is
solely attributable to the dilutive effect of stock options.
<PAGE>
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.

Fees  related to loan  originations  are  recognized  when the  related  loan is
delivered  to the third party  purchasers.  At December  31, 1999 and 1998,  the
Company had $3.0 million and $13.4 million, respectively, in mortgage loans held
for sale related to undelivered  loans for which purchase  commitments have been
received.

Business Promotion and Advertising

Advertising and promotion costs are expensed as incurred.

Restricted assets

Restricted  assets  include an investment  account  funded by a subsidiary for a
deferred compensation agreement with an independent  contractor.  The investment
is stated at market  value  with the  unrealized  gain or loss  included  in the
deferred compensation liability.

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  loss
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  discloses  the estimated  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  $31.0 million at December 31,
     1999.

     The carrying  value of the revolving  credit  facility at December 31, 1999
     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, 1999 and
     1998 was  $346,000  and $10,000,  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 three years.

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 1999,  the Company  recognized  net
revenue of $810,000  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.

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.

New Accounting Pronouncements

In April 1998, the Accounting Standards Executive Committee issued SOP No. 98-5,
Reporting on the Costs of Start-Up  Activities.  SOP No. 98-5  requires that the
cost of start-up activities previously capitalized be charged against income and
reported as a cumulative effect of a change in accounting principle, and further
requires  that such costs  subsequent  to adoption be expensed as incurred.  The
Company  adopted  this  standard  in the  first  quarter  of 1999  and  expensed
applicable  unamortized costs of $145,000  previously  capitalized in connection
with the start-up of all acquired companies.  As this amount is immaterial,  the
cumulative  effect of the change is included in  depreciation  and  amortization
expense on the statement of income.

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 statement will become effective for the Company in fiscal 2001.
Adoption of this  statement  is not  expected  to have a material  impact on the
Company's financial position, results of operations or cash flows.

2.   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 90% and 89% of total revenue in 1999 and 1998,  respectively while
the  Predecessor  approximated  87%. The Company has no other  single  source of
revenue greater than 7%.
<PAGE>

3.   Acquisitions

In 1998 and 1999,  the Company  purchased  the  following  companies  from third
parties:
<TABLE>
<CAPTION>
                                                                                 Purchase Price
Acquisition Date             Company                         Location            (in thousands)
----------------             -------                         --------           --------------
<S>                          <C>                             <C>                <C>
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 of
                              Omaha                          Omaha, NE          $  5,200

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

December 18, 1998            Nebraska Land Title & Abstract  Omaha, NE          $    900

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

August 23, 1999              Long Realty                     Tucson, AZ         $ 16,191

December 1, 1999             Champion Realty, Inc.           Annapolis, MD      $  8,137
</TABLE>

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  (dollars  in  thousands)  reconciles  the fair value of assets
acquired and the liabilities assumed to the purchase price:
<TABLE>
<CAPTION>
                                                  HOME      J.C.
                               Iowa     CBS Real  Real     Nichols    Nebraska    Paul                Champion
                              Realty     Estate  Estate     Real     Land Title Semonin     Long      Realty,      Other
                             Co., Inc.       Co.    Co.     Estate   & AbstractRealtors    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         30    19,167
Other intangibles and
 prepaid                      3,415        199      20       910         295        13      238          187          -     5,277
Goodwill                     54,607      3,842   3,145    13,628         446    11,038   15,808        6,773        113   109,400
                            --------    ------  -------  -----------  -------  -------  ----------  ------------  ------ ---------
Fair value of assets        109,941      6,267   5,501    25,008       1,173    15,448   19,893       10,262        165   193,658
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      $  900   $13,348  $16,191     $  8,137      $ 165  $145,171
                            ========    ======  ======   ===========  =======  =======  ==========  ============  ====== =========
</TABLE>

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.
<PAGE>

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):

                                          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)

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.

In 1998, the  acquisitions  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.

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.

5.   Sale-Leaseback Transactions

The  Company is party to  sale-leaseback  transactions  from  certain  brokerage
offices.  The leases are classified as operating  leases,  and gains realized on
the  sales  transactions  were  deferred  and are  being  credited  to income as
occupancy  expense  adjustments  over the lease terms.  At December 31, 1999 and
1998,  deferred  income related to these  transactions  was $23,000 and $14,000,
respectively.

6.   Other Current Assets
<PAGE>

Other current assets consisted of the following (dollars in thousands):
                                        As of December 31,
                                     1999                1998
                                     ----                ----
Receivables from affiliates           $12                 $69
Prepaid assets                      1,577               1,103
Other                               1,647                 971
                                    -----                 ---
                                   $3,236              $2,143
                                   ======              ======

7.  Office Property and Equipment

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

                                       As of December 31,
                                     1999              1998
                                     ----              ----
Land                                $1,561              $ 219
Buildings                            6,814              3,929
Furniture and equipment             21,976             13,914
                                    ------             ------
                                    30,351             18,062
Less accumulated depreciation        7,408              2,609
                                     -----              -----
                                   $22,943            $15,453
                                   =======            =======

Depreciation  expense for the Company in 1999 and 1998  totaled  $5,373,000  and
$2,609,000  while  the  Predecessor   charged   $1,488,000  against  income  for
depreciation 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, 1999, were
as follows (dollars in thousands):

             To Related Parties       To Third Parties           Total

   2000            $1,162                 $13,529               $14,691
   2001             1,186                  11,158                12,344
   2002             1,153                   9,192                10,345
   2003             1,074                   7,025                 8,099
   2004               620                   4,707                 5,327
   Thereafter       2,051                   9,978                12,029
                    -----                   -----                ------
                   $7,246                 $55,589               $62,835
                   ======                 =======               =======

8.   Intangible Assets

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

                                         As of December 31,

                                       1999               1998
                                       ----               ----
Goodwill                            $109,400            $74,738
Non-compete agreements                 1,503              1,350
Other intangibles                        729                602
                                    --------            -------
                                     111,632             76,690
Less accumulated amortization          4,926              1,568
                                    --------            -------
                                    $106,706            $75,122
                                    ========            =======

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

9.       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,
                               1999               1998
                               ----               ----
Current assets                $1,094              $984
Total assets                   2,008             1,633
Current liabilities               61               364
Total liabilities                 61               364


                                        Company                Predecessor
                        -----------------------------------  -------------------
                         Year Ended   May 28, 1998            January 1, 1998
                       December 31,     Through                   through
                            1999   December 31, 1998            May 27, 1998
                        -----------  ---------------            ------------
Total revenues            $13,318       $1,701                        $ -
Operating expenses         11,592        1,142                          -
Net income                 $3,358        $ 521                        $ -
                           ======        =====                        ===

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

10.       Long-term Debt
                                             As of December 31,
                                          1999               1998
(dollars in thousands)                    ----               ----
7.12% Private placement notes           $35,000             $35,000
Revolving credit facility                11,000              25,000
Other                                     2,817               1,445
                                         ------              ------
                                         48,817              61,445
Less current portion                        707               3,436
                                        -------             -------
                                        $48,110             $58,009
                                        =======             =======
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, 1999,
the blended average  interest rate on the revolving  credit facility  borrowings
was 8.1%.

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 5-year
credit facility.  At December 31, 1998, 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
<PAGE>
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, 1999 and
1998,  respectively,  the fair value of this swap  agreement  was  $346,000  and
$10,000 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):

              2000                       $ 707
              2001                         730
              2002                      11,694
              2003                         482
              2004                       5,084
              Thereafter                30,120
                                        ------
                                       $48,817

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, 1999 and 1998,  there were no borrowings under
this  agreement.  The interest  rate on  borrowings is equal to the 30-day LIBOR
rate (5.8% on December 31, 1999) plus 1%. 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.

11.       Income Taxes
                                       Company                      Predecessor
                           --------------------------------  -------------------
                                              May 28, 1998     January 1, 1998
(dollars in thousands)       Year Ended          Through           Through
                        December 31, 1999  December 31, 1998    May 27, 1998
                           --------------  -----------------    ---------------
Current                     $6,540             $ (23)               $1,585
Deferred                    (515)             (2,224)                   79
                            -------           -------                   --
Total expense (benefit)     $6,025           $(2,247)               $1,664
                            ======           ========               ======

<PAGE>


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,

                                            1999               1998
                                            ----               ----
Deferred tax assets related to:
Employee benefits                         $3,218              $2,275
Directors options                          1,479                   -
Bad debt reserves                          1,141                 334
Self-insurance reserves                      356                 377
Unrealized losses                            138                   -
NOL carryforward                               -               1,888
Other                                        431                 170
                                             ---                 ---
  Total deferred tax assets               $6,763              $5,044
                                          ------              ------

Deferred tax liabilities related to:
Intangibles                               $3,669              $2,824
Depreciable property                           -                  72
Other                                        415                   -
                                             ---               -----
  Total deferred tax liabilities           4,084               2,896
                                           -----               -----
  Net deferred tax asset                  $2,679              $2,148
                                          ======              ======

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

                                                 Company           Predecessor
                                     ---------------------------  --------------
                                                                    January 1,
                                                     May 28, 1998     1998
                                     Year Ended         Through      Through
                                December 31, 1999 December 31, 1998 May 27, 1998
                                ----------------- ----------------- ------------
Statutory federal income tax rate       35.0%          35.0%             35.0%
State income tax, net of federal income
tax benefit                              8.5            5.4               7.0
Amortization of acquisition costs        0.3            0.3                 -
Other                                    0.3           (1.1)              4.0
                                         ---           -----             -----
Effective federal and state income tax
rate                                    44.1%          39.6%             46.0%
                                        =====          =====             =====

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.

12.      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 50
to 125 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, 1999 and 1998,  the Company
recognized expense of $1.3 million and $1.2 million for the plans,  respectively
while the Predecessor recognized expense of $100,000 through May 27, 1998.
<PAGE>

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.

Deferred Compensation Plan

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, 1999, the Company had accrued  approximately
$5.1  million for  estimated  future  payments to  qualifying  sales  agents and
incurred expenses of $922,000 for the sales agents' deferred  compensation plan.
At December 31,  1998,  the Company had accrued  approximately  $4.7 million for
estimated  future  payments to qualifying  sales agents.  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, 1999,
the Company had accrued $1.1 million for estimated future payments to qualifying
sales agents and incurred  expenses of $215,000 for the sales  agents'  deferred
compensation  plan. The Company holds U.S.  Treasury Strips  (principal only) to
fund this obligation. At December 31, 1998, the Company had accrued $851,000 for
estimated  future  payments to qualifying  sales agents.  For 1998,  the Company
incurred expenses of $200,000 for the sales agents' deferred compensation plan.


<PAGE>



13.       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, 1999
and 1998 (dollars in thousands):

                                          Company            Predecessor
                                                May 28, 1998 January 1, 1998
                                  Year Ended      Through       Through
                                  December 31, December 31,   May 27, 1998
                                       1999         1998
                                   -----------------------   ---------------
Assets:
  Advances receivable              $       12   $       69    $        -
                                   ==========   ==========    ==========

Liabilities:
  Accounts Payable                 $    1,042   $      354    $        -
  Accrued Expenses                          -           13             -
                                   ----------   ----------    ----------
                                   $    1,042   $      367    $        -
                                   ==========   ==========    ==========
Stockholders' Equity:
  Notes receivable for shares sold $      651   $      896    $        -
                                   ==========   ==========    ==========
Revenues:
  Title fees                       $        -   $        -    $      387
  Other                                     -            -            11
                                   ----------   ----------    ----------
                                   $        -   $        -    $      398
                                   ==========   ==========    ==========
Expenses:
  Occupancy                        $      821   $      913    $      292
  Corporate allocations                 1,656        1,552           359
                                   ----------   ----------    ----------
                                   $    2,477   $    2,465    $      651
                                   ==========   ==========    ==========
Other income (expenses):
  Interest income                  $        -   $       64    $       25
  Interest expense                 $      (58)  $   (1,246)   $     (485)
                                   -----------  -----------   -----------
                                   $      (58)  $   (1,182)   $     (460)
                                   ===========  ===========   ===========

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  value  of  the  500  issued  shares  and
corresponding  receivables was $1.5 million.  The shares carry the same dividend
and voting  rights as the shares held by the Parent.  The officers and employees
held a 5% ownership interest as of December 31, 1998.

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 1999 and 1998,  the  amount  accrued  to the  allowance  for
estimated  forgiveness and expensed as  compensation  was $245,000 and $629,000,
respectively.  The balance of the notes receivable at December 31, 1999 and 1998
was $651,000 and $896,000,  respectively.  The Company  charges  interest on the
outstanding  receivable  balance at a rate equal to its average annual borrowing
rate (6.87% at December 31,  1999).  Interest  income  recorded on the notes was
$110,000 and $64,000 in 1999 and 1998, 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,  accounting,  cash
management and human resource services.

The officers of several  subsidiaries of the Company are members of the Board of
Directors of banks that hold investments of the Company.
<PAGE>

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 7.

14.       Investment Securities

The investment securities held at December 31, 1999 were (dollars in thousands):

                                            Gross         Gross
                            Amortized     Unrealized    Unrealized       Fair
                               Cost         Gains         Losses         Value

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
                               ====            ===          ====           ===

The investment securities held at December 31, 1998 were (dollars in thousands):

                                               Gross      Gross
                              Amortized     Unrealized  Unrealized   Fair
                                 Cost          Gains      Losses    Value

Available-for-sale:
 Highwoods Properties Inc.       $288            $ 9        $ -      $297
                                 ====            ===        ===      ====
Held-to-maturity:
U.S. Treasury Strips
   (principal only)              $364            $90        $ -      $454
Agency obligation                 287             10          -       297
                                  ---           ----        ---      ----
                                 $651           $100        $ -      $751
                                 ====           ====        ===      ====


The maturities of held-to-maturity  investment  securities and their approximate
fair value at December 31, 1999 were as follows (dollars in thousands):

                                              Amortized           Fair
                                                 Cost             Value
Due after five years through ten years         $ 944             $ 957

15.       Commitments and Contingencies

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.

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.  These payments
will be recorded as additional costs of acquisition. For the year ended December
31, 1999, there was no obligation because certain  profitability levels were not
achieved.

The CBS Real Estate stock purchase  agreement  requires certain  installment and
retention  payments be made after the closing date based on agent  retention and
profitability.  A $250,000  payment was made in late 1998,  with  subsequent net
payments of $200,000  made in early 1999.  The required  payments have been made
and recorded as additional costs of acquisition.
<PAGE>

The Long Realty 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.  These
payments will be recorded as additional costs of acquisition upon achieving such
profitability levels.

The Champion Realty 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. These payments
will be recorded as additional costs of acquisition.

16.       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 1999:

(Shares in thousands)                                        Weighted Average
                                      Options outstanding     Exercise Price

Balance at October 13, 1999                   -                     $  -
Options granted                           2,216                    13.36
Options exercised                             -                        -
Options canceled/forfeited                   25                    15.00
                                             --                   ------
Balance at December 31, 1999              2,191                   $13.34
                                          =====                   ======
Number of shares exercisable as of
December 31, 1999                           506                    $7.80
                                            ===                    =====

For the number of shares  exercisable  as of  December  31,  1999,  the range of
exercise prices is $5.89 to $15.00.  The weighted average remaining  contractual
life is 9.8 years.

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 $1.2 million
in 1999.  Net income and  earnings  per share  would have been $6.9  million and
$0.86 per share, respectively in 1999.

The fair  value of options  granted  during  1999 was $6.98.  The fair value for
stock options was estimated  using the  Black-Scholes  option pricing model with
the following  assumptions:  risk-free interest rate of 6.31%; expected dividend
yield  of 0%;  expected  option  life  of 5  years;  and  expected  stock  price
volatility of 34.1%.


<PAGE>



17.       Quarterly Financial Data (Unaudited)

Following is a summary of the Company's  quarterly results of operations for the
year ended  December 31, 1999 and period from May 28, 1998 through  December 31,
1998  (dollars in thousands  except per share data).  The Company was formed May
28,  1998.  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.
<TABLE>
<CAPTION>

                                                             Three Months Ended
                            ------------------- -------------------- --------------------- ---------------------
1999                                  March 31              June 30          September 30           December 31
----                                  --------              -------          ------------           -----------
<S>                                  <C>                   <C>                   <C>                   <C>
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)              $   .89                 $0.62                $(0.19)
                                      ========                  ===                 =====                =======
</TABLE>

                                             Three Months Ended
                                -------------------- ---------------------
1998                           May 28 - June 30   September 30   December 31
----                           ----------------   ------------   -----------
Total revenues                      $29,718          $81,337       $79,536
Operating expenses                   29,909            82,752       82,277
EBITDA                                5,153                          2,024
Net income (loss)                     $(253)         $(1,163)      $(2,018)
                                      ======         ========      ========
Net income (loss) per
share: basic and diluted            $ (0.04)         $ (0.17)      $ (0.30)
                                     =======          =======      =======

18.       Subsequent Event:

On January 12, 2000,  the Company issued 1,500 shares of its Series A Non-Voting
Convertible  Preferred  Stock  (the  "Preferred  Stock") to U.S.  Bancorp  Piper
Jaffray Inc. ("Piper Jaffray") in exchange for 1,500,000 shares of the Company's
common  stock.  The exchange of Preferred  Stock for common stock  enables Piper
Jaffray,  which is an  affiliate  of U.S.  Bancorp,  to satisfy the Bank Holding
Company Act of 1956  requirements that a bank holding company and its affiliates
own less than 5% of the voting  stock of a  publicly  traded  corporation.  Each
share of Preferred Stock is convertible into 1,000 shares of common stock at any
time at Piper Jaffray's option and is also subject to automatic  conversion upon
transfer by Piper Jaffray to any person that is not a bank holding company or an
affiliate  thereof and upon the liquidation of the Company.  The Preferred Stock
does not have any redemption  preference or voting rights (except as required by
law). The Preferred Stock has the same right to dividends as the common stock.


<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 51  present  fairly,  in all  material
respects,  the financial position of HomeServices.Com  Inc. and its subsidiaries
(the  "Company")  as of  December  31,  1999 and 1998,  and the results of their
operations  and their cash flows for the year ended  December 31, 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.  In  addition,  in our  opinion,  the
financial  statement  schedule appearing under Item 14(a)(2) on page 51 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  based on our  audits.  We  conducted  our audits of these
financial statements in accordance with auditing standards generally accepted in
the United  States  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 the opinion expressed above.

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".

PricewaterhouseCoopers LLP

Minneapolis, Minnesota
January 25, 2000


<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, 2000.
There are no family relationships among any of HomeServices' executive officers,
directors and key employees.

NAME                          AGE     POSITION

David L. Sokol(1)(2)          43      Chairman; Director
Ronald J. Peltier(1)          50      President and Chief Executive Officer;
Steven A. McArthur(1)(2)(3)   42      Senior Vice President, General Counsel
Dwayne J. Coben               41      Senior Vice President and Chief
Douglas R. Carey              41      Vice President, e-commerce
Jack W. Frost                 66      President and Chief Executive Officer
R. Michael Knapp              48      President and Chief Executive Officer
Arne M. Rovick                55      Vice Chairman and General Counsel of
Joseph J. Valenti             51      President and Chief Executive Officer
George E. Gans III            60      President and Chief Executive Officer
Stephen E. Quinlan            46      President and Chief Executive Officer
Christopher C. Coile          55      President and Chief Executive Officer
Gregory E. Abel               37      Director
Richard R. Jaros(1)(2)(3)     48      Director
W. David Scott(2)(3)          38      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,  Mergers and  Acquisitions of MidAmerican  Holdings since
March 1999 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.

Dwayne J. Coben has been Senior Vice  President and Chief  Financial  Officer of
HomeServices  since  its  inception  in July  1999.  He has  also  been the Vice
President,  Utility  Development of MidAmerican Energy Company since April 1999.
He was a Corporate  Development Vice President from April 1998 to March 1998 and
Director,  Corporate  Development from August 1997 to March 1998. Before joining
MidAmerican  Energy Company,  Mr. Coben was  Controller,  Marketing and Customer
Services  for BC Hydro  from  December  1994 to August  1997,  and held  various
business development management positions with BC Hydro from 1990 to 1994.

Douglas  R.  Carey  has  been  Vice   President  of  e-commerce   since  joining
HomeServices in November 1999. Prior to joining  HomeServices,  Mr. Carey was an
independent  consultant  serving  in  various  leadership  roles for  technology
companies.  From 1992 to 1998,  Mr. Carey was Director of Corporate  Development
for Circon  Corporation,  a then publicly held medical technology  company.  Mr.
Carey holds an MBA from Stanford  University and a BS with high distinction from
the University of Minnesota and is a Certified  Public  Accountant and Certified
Management Accountant.

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  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.
<PAGE>

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.

George  E.  Gans III has been  President  and Chief  Executive  Officer  of Paul
Semonin  Realtors  since 1985.  Mr.  Gans also  serves as a director  for Realty
Alliance and the  National  Association  of Realtors,  serves as a member of the
Board of Governors for Norton Health Care and for the Norton  Hospital  Advisory
Board and serves on the Advisory  Board and  Executive  Committee  for Bank One,
Kentucky,  NA.  Mr.  Gans  joined  Paul  Semonin  Realtors  in  1973  as a sales
associate,  became an office  manager in 1979 and  Executive  Vice  President in
1984.

Stephen E. Quinlan has been President and Chief Executive Officer of Long Realty
since August of 1994.  From 1976 through 1994, Mr. Quinlan has held a variety of
positions at Long Realty including Sales Associate in residential and commercial
areas,  Branch Manager,  General  Manager,  and Designated  Broker.  Mr. Quinlan
serves as a member  of the  Boards  of  Directors  and/or  Advisory  Boards  for
Sotheby's International Realty, Cendant Mobility Services,  Arizona Compass Bank
and Southern Arizona Leadership Council. Mr. Quinlan is also Vice President of a
local Realtor Association and a member of the Vision Group.

Chris C. Coile has been President and Chief Executive Officer of Champion Realty
since its inception 1987.  Prior to his role at Champion  Realty,  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 Chief  Executive  Officer of MidAmerican  Energy Company since
March 1999. Mr. Abel held various  executive  positions at MidAmerican  Holdings
from 1992 to March 1999, including responsibility for engineering, construction,
accounting and various administrative functions. He has been President and Chief
Operating  Officer of  MidAmerican  Holdings  since  March  1998.  Mr. Abel is a
Chartered  Accountant and from 1984 to 1992 was employed by Price  Waterhouse 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, 1999
                           and 1998.

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

                           Consolidated  Statements  of Cash  Flows for the year
                           ended December 31, 1999 and the periods ended May 27,
                           1998 and December 31, 1998.

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

                           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>
                                                                       Additions
                                                              ----------------------------
                                                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, 1999
Allowance for doubtful trade accounts         $       1,346    $    87        $   (106)    $             $     1,332
Period ended December 31, 1998
Allowance for doubtful trade accounts         $                $    27       $             $             $     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).



<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 29 day of March, 2000.

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

                            *By: /s/ Dwayne J. Coben
                             Dwayne J. Coben
                             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, 2000
----------------------
Ronald J. Peltier
President, Chief Executive Officer and
Director

/s/  Dwayne J. Coben*                                        March 29, 2000
---------------------
Dwayne J. Coben
Senior Vice President and
Chief Financial Officer


<PAGE>




/s/  Jack W. Frost*                                          March 29, 2000
--------------------
Jack W. Frost
Director

/s/   R. Michael Knapp*                                      March 29, 2000
----------------------
R. Michael Knapp
Director

/s/  Steven A. McArthur*                                     March 29, 2000
-----------------------
Steven A. McArthur
Director

/s/   Gregory E. Abel*                                       March 29, 2000
---------------------
Gregory E. Abel
Director

/s/    W. David Scott*                                       March 29, 2000
---------------------
W. David Scott
Director

*By:  /s/  Dwayne J. Coben                                   March 29, 2000
      --------------------
Dwayne J. Coben
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).
<PAGE>

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).

10.12    Form of Tax Indemnity Agreement.

21.0     Subsidiaries of Registrant.

24.0     Power of Attorney.

27.0     Financial Data Schedule.