Did You Accidentally Hire a Realtor to Sell Your Business?

Health Insurance - Did You Accidentally Hire a Realtor to Sell Your Business?

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Some firm owner's choose to go with a broker that specializes in real estate because they're a friend or maybe because they want to save money on fees. It is well known that firm brokers charge a higher fee or commission that our Realtor counterparts do.

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Remember the old words of wisdom: You get what you pay for.

This month I am representing some firm owners seeing to enlarge as a buyer's agent that missed out on a combine of our new listings and asked if I could report them in their quest for other businesses and help them conclude either they met their needs or not.

I am an Illinois real estate licensee as well as a licensed firm broker so I hopped on the Mls (in increasing to checking with other firm brokers who don't put their listings on the Mls) and did a detailed quest seeing for some businesses listed by Realtors.

It is astonishing how many businesses I find that have the addresses listed clear as day - and yet, the listing agent has it posted in the comments: Confidential! Ironically, whatever with internet entrance can tell that this firm is on the shop and walk in the front door and start blabbering to employees, customers, competitors, vendors and so on. We routinely pick up new listings after a firm owner has had a bad experience with Realtors blowing confidentiality and never even knew that they were left exposed on the Mls like this until habitancy started advent in announcing that the firm was for sale to whatever that would listen!

Now some well-meaning Realtors have the wisdom to hide the address until allowable forms have been signed, but they still normally do not know whatever about the firm except what the owner wants to sell it for. Realtors will normally have no idea how to read a financial report, tax returns, or a P&L statement - let alone how to translate it into Cash Flow for a prospective buyer.

Here's an transfer that took place recently: I experience a Realtor who has a liquor store listed for 9,000 - the address and pictures are posted clear as day online before I even picked up the phone. If I was shady I could have gone right to the seeder and consummated a deal on the side and cut her fully out of the picture. Let alone all the havoc I could have created if I was a nefarious individual up to no good.

I head somewhere expertly and supply her with a signed confidentiality bargain that she wanted. In return she provides me with the gross sales, the rent and inventory. No operating expenses, no facts on either there is supplementary earnings from lotto or Atm, no cost of goods, no idea of what types of liquor is being sold, no idea if taxes and cam are included in the rent and on and on.

Alright, maybe she's just playing her cards close. I leave her a message and an email and a combine days later she replies to my email saying that she has already provided me enough facts and that if my buyer is serious that he should make an offer! Not only was this rude and unprofessional, but now something no ifs ands or buts smells funny. I do some deeper study and find previous "expired" listings on the Mls for the same Realtor and property going back a year and half. This deal has been on the shop for a year and a half. Things are starting to make sense.

After a petite diplomacy and explaining that the buyer should probably conclude if enough facts has been provided she answers some more of our questions. Unfortunately she tells us the seller's Cash Flow is 0,000 a month... On .5Mm Gross Sales - she also tells us some other things that were either flat-out lies or she was just ignorant of the process. I left it to my buyer to conclude if he wanted to move transmit because this was either one Shady Lady or she was just trying to "Fake it 'til she Makes it".

For those who don't know, Cash Flow is the Net earnings of the firm plus any "discretionary expenses" such as Owner's health insurance or debt assistance added back into that figure. It's a method for determining the bottom line: how much Cash does this firm generate after all expenses. I know that on a liquor store it's going to be 10-15% of the gross revenue, give or take few percent. In other words she should have told us it was about 0,000 to 5,000 or so.

It could be a compound of ignorance and/or an unrealistic seeder seeing to take advantage of someone, but one thing was clear: That deal was a Pass for many reasons to a savvy buyer.

Now this is certainly not the case for all Realtor's and I don't want to give you the impression that all Realtors do not know how to sell or value a business. I'm know there are a few, especially in the industrial sector, that know a thing or two about selling businesses and determining Cash Flow, but this lady was no industrial agent. I can tell that by seeing at past deals she's worked on via the Mls quest features.

Part of the point I want to make is this: Realtors typically sell residential real estate - they sell homes and buildings. When I put my house on the shop I hired a Realtor! It's not what I do, I want to hire person who does it every day and knows that market.

Furthermore, an experienced industrial Realtor who sells businesses will charge more on firm deals because of the extra work and specialized marketing that goes into the process.

With this liquor store, the agent must have known the seeder or the seeder was just Sold on her and the fact that she was only charging 4%. Again you get what you pay for. She provided her seeder with a few sentences in a word doc and lot of bad exposure by fully neglecting confidentiality. Competent brokers will supply detailed firm profiles or a prospectus with an informal firm valuation in increasing to strictly confidential assistance and effective, targeted marketing. We do not just throw something on the Mls and hope person else brings us a buyer.

Competent firm Brokers know how to value a firm and know how to avow confidentiality and qualify prospective buyers in way to eliminate most of the tire-kickers and time-wasters from ever seeing out about your business, and upsetting your employees and customers. Our fee's are higher than a Realtor, but there's a much best opening of us selling it and for a higher sales price.

The bottom line is this: If you're serious about valuing and selling your firm and maintaining its integrity in the process do not hire a Realtor because the commission is lower. Realtors' hands-down will beat a competent firm broker on price every time, but - that's right! - you get what you pay for.

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