Why You Don’t Hire a Real Estate Agent to Sell a Business

Why You Don't Hire a Real Estate Agent to Sell a BusinessWhile at first there may seem to be some logic behind the idea of hiring a real estate agent, it’s probably the worst thing you can do if you’re seriously interested in either selling your business or getting the price you want for it. This doesn’t mean real estate agents and Realtors® you know are bad people. They are just not the people to hire to sell a business.

Pros?

But before we get to the bad news, let’s examine some of the reasons you might consider a real estate agent in the first place:

  1. Price! The real estate agent has told you that he/she will take a lower commission than a business broker would. That would be a pro, if the real estate agent could get you the same price that a business broker could. Otherwise, it’s very much penny-wise, pound-foolish.
  2. Real estate. Some sellers might think that because real estate is an asset that is involved in the sale, that they need to hire a real estate agent to handle the business sale. This isn’t necessarily the case.

Cons

Good vs. BadAlas, that’s the end of the good news. Now to the realities of hiring a real estate agent to sell a business.

  • Many business brokers have real estate licenses themselves or have solid relationships with brokers who do, so there is no need to hire a real estate agent just because real estate is involved in the sale of your business.
  • A real estate agent will list your business on MLS, where no one in the history of buying businesses has thought of looking to buy a business.
  • Real estate agents are not familiar with confidential sales.
  • A real estate agent does not have any of the certifications that are standard in business brokering.  Whether it’s a CBI, CM&AP, or M&AMI, they don’t have them. They know the value of certifications because they often have them themselves… but not for selling businesses.
  • A real estate agent knows about selling homes and commercial property, not businesses.
    • Due diligence, financing, purchase and sale agreements are all done differently
    • Pricing of a business is very different from pricing real estate
    • Marketing a business is entirely different from marketing a home
      • Part of this is nurturing a trusted set of potential buyers who have the financial wherewithal to do more than kick tires (if you want more insight into marketing a business, check out our day in the life of a broker)
  • A real estate agent is used to dealing with clients who are not looking to acquire and build a business. They’re used to dealing with someone who is looking to buy a home. They may occasionally deal with those interested in real estate investing, but in those cases either someone is looking to buy and flip (a short term investment) or buy and rent (usually something that will be delegated to a property manager, not wrapped into the daily life of the buyer).

An Important Choice

An Important ChoiceMore often than not, the sale of a business will be the most significant financial event of your life. This isn’t something that you want to price shop on, or delegate to someone just because he/she is a dear friend. This is something that you want a seasoned expert to handle, so they can guide you through the process, get you serious and qualified offers, and shepherd you to closing successfully. Many brokers have real estate licenses, but we don’t sell houses or investment properties. We know our expertise!

We’ve got real estate licenses galore in our offices here at Apex.  If you’ve got real estate in your business sale, we’ve got you covered.