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Selling Your Real Estate Business-- What is it Worth? by Geraldine Santiago

By
Real Estate Agent with RE/MAX Crest Realty

 

Selling Your Real Estate Business-- What is it Worth?

by Geraldine Santiago

 

Are you thinking of selling your real estate business?  Perhaps you may not be thinking about this now, at this very moment, but at some point you may want to do so.  You may want to retire, or you may have health issues which forces you to sell or change your lifestyle, or you may just want to change direction period.  

After many many years of cultivating your business, growing your business, marketing and promoting, you are not just going to give it up, are you? How can you transfer ownership of a domain name which your personal name like www.geraldinesantiago.com?  No one else can buy that name, or use that name and no one else would want it.  How are you going to sell your business if it starts and ends there? Who is going to buy it? Can you think of a few names of your colleagues you know who might want to buy your business from you?

A service-based business may be difficult to sell because it is client based and a personal relationship is created.  These are clients who you have cultivated over the years, and who are loyal to you, who may not be too keen on your replacement even with your recommendation.Even if your replacement has worked with you for years and knows your clients very well, this does not mean that your clients will still go to your replacement.

I have been with my hair dresser for over ten years. When he moved, I moved as well.  It didn’t matter which salon he went to, I moved with him.  My hair dresser is as personal as they come and it is difficult to change.  Unless he retires or moves to another city altogether, will I find my own replacement.  In addition, his replacement wouldn’t necessarily be the person he recommends as for me, it is a very personal decision.

How much do you value a business? Wouldn’t you want to sell it?  What if you were to pass away, would your spouse or children be able to sell your business or would it just disappear?

It is easier to sell a business if one has assets.  Take for instance a grocery store, which has tangible assets like equipment, land, vehicles, inventory which one can place a price tag or value. However, with a service based industry, it might be a little bit more difficult to put a value based on clients and service.  In addition, it might be a little more difficult to put a value based on 'goodwill', virtual property such as your website, intellectual property such as logos, branding, blogs, designs, copyrights, patents and so on. 

Many professionals such as dentist groups and even law firms today are making the change to a more generic or descriptive name instead of a personal name rather a name based on a Senior partner(s).  Senior lawyers may be able to sell their portion of their law firm business without having to jeopardize the company.  The company can still remain intact because its name has remained the same over the years.

From the very first day we started our real estate business, it should have been set up like any other business.  We should be able to sell it when we retire. and it should have a value and worth.

What are your thoughts?  I’d like to hear from you.  

 

 

 

Comments (4)

Gordon Sloan
Group1 Real Estate, selling houses in Salt Lake City Utah - Salt Lake City, UT
Salt Lake Homes For Sale, Salt Lake Real Estate

By far, the most valuable asset in my business is a website, that is aged, and creates a predictivable number of leads per month.

 

May 18, 2010 06:48 AM
Geraldine Santiago
RE/MAX Crest Realty - Vancouver, BC
Geraldine Santiago

Yes, a website is a great tool to have.  I'm doing some research on buying a business which is web based, transferring ownership is easier with a product to sell like a visor, or a tennis equipment.  I'm learning a lot.

May 18, 2010 07:01 AM
Steve Davis
Davis Coastal Properties - Carlsbad, CA
Carlsbad CA

Geraldine - good question. I have a real estate agent retiring and I am considering taking over their business. What fees do I pay her?  Have you found any information since you posted this back in 2010??

Sep 08, 2012 01:13 PM
Anonymous
Geraldine Santiago

Hi Steve,

In my situation there were several high earning real estate agents in our area I wanted to approach to see if they would be interested in selling their client list to me, if not now, at a later time. 

However, since my post in 2010, I did not go ahead with any outright purchase because clients may not like me, plain and simple.  Unless clients have signed a contract, they don't have to be loyal to you, just because you have purchased the retiring Realtor's client list.

I think it might be a totally different situation if one was related to the retiring Realtor, like a son/daughter or even an associate or junior in a team of the retiring realtor. At some point, you would have already had the chance to work with the clients hands on so that they already can see that you and them are a good fit, etc.  Unless there is some type of grace period where you work side by side with the retiring Realtor, it is difficult for the clients to be loyal to you just because you have taken the business over, in my opinion.  Of course, I'm speaking with respect to my local area. If you just so happened to be the only Realtor in your area, that may be a different story altogether! 

Your style of marketing might be completly different, so you might not even win them over to begin with.  

I thought of lump sum or paying a per centage of the sale, like you would a referral?  Then again, clients are not loyal.......

Those are my thoughts on the matter.  I am not sure if it helped you? Let me know if you do find any information.  

Best of luck though!  Geraldine

 

 

Sep 08, 2012 01:59 PM
#4