Going Behind A Brokers Back: How Does A Broker Protect Themself?

Comments & Replies: 2     Views: 10844     Posted By: Joe Ranieri  Joe Ranieri, Business Broker: LA, Orange Counties

What are some ways a broker can prevent a buyer and seller from doing a deal behind their back and what to do about it if it happens? Joe Ranieri (Orange County Business Broker) discusses ways a business broker or agent can protect themselves from buyers and sellers trying to circumvent them.

Topics: Business Brokerage, Buying A Business, Selling A Business     Tags: business brokers, buying a business, escrow bulk sales, selling a business



What are some ways a broker can prevent a buyer and seller from doing a deal behind their back and what to do about it if it happens?

For most business brokers, it's something that has happened: finding out one of your sellers and perhaps one of your buyers have decided to the deal without you. The scenario is usually the same, both parties lower the agreed price a little, but not more than the amount the seller would owe the broker a commission. For a broker, who has invested many hours and resources in selling the business, it's frustrating to feel cheated out of an earned commission. Just like there are some dishonest brokers, there are also dishonest buyers and sellers, and I've learned that although there will always be people who try to cheat the system, there are some ways to deter it.

1. Take only listings that you can adequately service.

It's tempting to take as many listings as possible, because we all know the list/sell ratios in business brokerage, but if you take too many then it's impossible to service them all appropriately. I've found that the sellers/buyers who have tried to make a deal without me, even though there is a listing contract in place, are primarily the ones I took that were out of the area, and beyond my normal sales territory. If the listing is an hour and half away, I must ask myself, "do I really want to make a 3-hour round trip to get a modification of terms or some other contract signed?" Does taking a listing that I can't properly service really serve the buyer, seller, or myself correctly?

2. Subscribe to a service of escrow publications.

There are companies out there which will tell each week which businesses have opened an escrow or have posted with ABC. These companies are invaluable in monitoring what is going on in the market. I've found a few of my clients over the years who have opened an escrow amongst each other, thinking I wouldn't find out. If I do see that one of my clients has gone to escrow without me, I'll call the escrow company and put a claim into escrow for my commission. If the seller and buyer decide to sell it amongst themselves and don't go to escrow, then of course I have fewer opportunities of recourse.

3. Always keep a record of Non-disclosures with buyers.

Never, never be tempted to send a buyer out to one of your listings without having them sign an NDA. Some buyers will try to say, "I'm on the road and have no access to a computer, can you just give me the listing? Keep a good record of who you send out to the business listings, and avoid giving out too many to one buyer at a time. Also, beware of buyers who want addresses on listings that aren t the same type, such as, "your laundromat, coffee shop, bar, liquor store, mail box, and pool hall." In my listing contract and on NDA, there is language which prevents the buyer and seller from doing a deal without me for 90-120 after the expiration of the listing contract, so keep good records!

4. Produce a list to the seller of all prospective buyers you have procured the buyer.

At the end of the listing contract, provide the seller with names, not numbers, but names of all the buyers you procured through your marketing efforts. This reminds them that you keep good records, and their commitment to your listing contract, which has expired, but may have terms that spells how to deal with buyers found during the length of the contract. I have seen brokers who have taken their clients to small claims court for an earned commission, but even if you do get a judgement, it's still on you to collect, so possibly see an attorney for advice.

5. If it happens to you, don't let it get you down.

If you do get cheated out of your commission, deal with it in the way you think is best, but don t allow it to consume you or affect the way you deal with future clients. Most my clients are trustworthy, and so I don't let a few of the bad ones, make me a jaded person. Trust in our business is very important.

Contributor: Broker/Consultant: Elderly Care Services

Thank you Joe for bringing this topic of discussion. All of us Veteran Agents I am sure have many stories to share on this topic, good and bad.

We all need to remind ourselves over and over that Business Brokerage, like many other sales jobs is a relationship based business. No matter how many contracts and agreements we have in place, if trust, respect and honor are not in place people will unfortunately go outside the set boundaries.

So how does a Business Broker protect themselves from an unscrupulous Buyer or Seller?

1. Educate the Buyer and Seller as to what is expected of one another and what we can and can not do.
2. Work your butt off to create loyal fans for life.
3. Treat everyone with respect and in turn ask for respect back.
4. Cut ties with "challenging" Buyers and Sellers as quickly as possible with great respect.

And, remember to have fun.


  Helpful Resources To Assist In Selling And Buying California Businesses
Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Shalonda Chappel: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Can A Business Seller Back Out Of Escrow If They Simply Change Their Mind?

Can a seller of a small business back out of an ongoing escrow? Probably, yes, it all depends how far along the escrow is, which will dictate how messy things will get for both owner & buyer. Joe Ranieri (Southern California Business Broker) gives his feedback with others on this BizBen Discussion.

Millennial Buyers: What Are They Seeking When Buying A Small Business?

First, we must define, who are the Millennials? The exact years are up for debate, but Millennials were born during approximately between 1981-1986, which today would be between 22 and 37 years of age. Joe Ranieri looks at what these buyers are looking for and what qualities they seek in businesses.

Broker Explains Allocation Of The Purchase Price When Selling A Business

There are a handful of key asset categories in allocating or breaking down the purchase price allocation of a California business sale. Allocation is required to complete the transaction. In this blog post Lee Petsas (Orange County Business Broker) at 714-363-0440 covers asset allocation classes.

Business Seller Mistakes Near The Close Of Escrow Can Tank A Deal To Sell

Let's be honest, typically it takes a while (6 months to a year) to sell a business, from listing to close of escrow, and so it's common that many sellers are anxious as the close of escrow nears with a buyer. Joe Ranieri (Business Broker) examines common seller mistakes owners should stay clear of.

Buying A Business With Partners Or Family Members: Pros And Cons

Buying a business with a partner/partners, family members can make one think twice about ever doing it twice! However in this BizBen Discussion Post Joe Ranieri (Orange County Business Broker at 714-292-5448) chats about identifying roles, defining goals, attorney visits, and other relating issues.

Deposits With Business Purchase Agreements: How Much? Structure? Refundable?

Purchase agreements when buying or selling a small business can be tricky. A top Southern CA Business Broker discusses this topic including multiple strategies regarding deposits with business purchase agreements. Lee Petsas (Orange County Business Broker) at 714-363-044 contributes this blog post

Purchase A Small Business With Limited Or No Cash: Financing Tips For Buyers

Purchasing a business with no money down can be difficult, but not impossible. Financing a business purchase or down payment can often be accomplished with these strategies offered from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) in this post.

Business Purchase Financing: SBA Loans & Non SBA Financing Solution Services

I provide niche business purchase financial advisory and loan placement services with SBA and Non-SBA Financing, Retirement Fund Rollover Solutions, Combo Financing Packages, etc. To get more information about getting Pre-Qualified & more info on the ProBuy/ProSell Programs: 925-785-3118 Direct.


Escrow Town And Country Southern California
Bill Ziprick Legal Advise
Escrow Services From Helen Yoo New Century Escrow
Escrow Services Diane Boudreau-Tschetter
Facebook
Twitter
Linkedin
Vlogs and Podcasts
BizBen ProBuy Program
Instant Email Alerts On BizBen
BizBen ProSell Program
New Postings Reports On BizBen Sign Up
Business For Sale California Stats
Advertise On BizBen


BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2020, All Rights Reserved



Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
BizBen Podcast & Webinar: Business Purchase Financing And SBA Loan Optio...
Read More News
Getting An SBA Loan To Buy A Small Business: Dispelling Some Major Myths...
Read More News