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Should I Sell My Business With A Business Broker Or Traditional Real Estate Agent Who Mostly Sells Homes?



If you're in the real estate business then you ve probably heard when talking with a potential seller, "well, let me think about it, one of my family member has a real estate license." The real estate business, either commercial or residential can often defy the practices of other businesses. Ask yourself, have you ever had a problem with a business broker who didn't return your calls? If a person ran any other type of business and didn t return potential customers' calls in a prompt matter, how long would they be in business? Getting a real estate license compared to other professions is quite a short process, and so to the public, they sometimes cannot tell at first who the seasoned pro is vs the novice. There are some sellers who believe the skills of the business broker and residential real estate agent are interchangeable, but they are vastly different, both of course require tenacity and tough negotiating skills, but differ in the process of how the deals get done.

The average real estate agent who sells homes will typically sell their own listings about 20% of the time, while 80% of the time the buyer will be represented by another agent. When an agent represents both buyer and seller it is called "dual agency", leaving either the seller or buyer questioning "who's interest is he/she looking out for, me or the other person?" Many times, to avoid this conflict of interest scenario, the agent will refer the buyer to an office colleague, and that person will represent him/her. The business broker on the other hand will represent both buyer and seller 80% of the time, while 20% cooperating with an outside broker. A large portion of brokers either work under their own brokerage alone or work with 2-3 other people. Most brokers are responsible to procure their own buyers for their listings, making "dual agency" a standard in the business. It takes true negotiating skills, because the seller obviously wants the highest price possible, while the buyer wants the lowest price possible.

Before one is representing the buyer, one must make it easy enough for the buyer to find them. The only way for a real estate agent to sell a home is put it in the MLS (Multiple Listing Service), which once in that system, will go into about 30-40 other sites such as Realtor.com, Homes.com, etc. the point of course, is once listed, the whole world can see your neighbor just listed their home, as an example. There is a category for "businesses opportunities" in the MLS, and this information does not auto populate into other sites accessible to the public. Many agents who sell homes and sell the occasional business will just put it in the MLS, which leaves the business about 80%-90% unexposed, since most buyers themselves will actively look for their own opportunities and not work with a "buyer's agent". Many business brokers don't belong to a local real estate board, so they don't even have access to the MLS, and so they sell their listings through sites like BizBen.com, allowing buyers to search for opportunities, since classified ads in print newspapers have become almost non-effective.

Pricing a business takes years of experience, while one could use a general multiplier of the monthly gross sales, the problem is different businesses use different formulas, and all businesses have factors (high/low rent, heavy labor costs, etc.) that could affect the price. Unlike a home, one can t just sell a business by saying "well, a pizza shop around the corner sold for this price, so that's what we will sell yours for ", because each business has too many variables.

Even a blind pig will find the occasional trough, as the saying goes, which basically means, one could list a business, price it right, find the buyer, and get it into escrow, but only someone who knows what they're doing can routinely get it to close. Holding a deal together and getting it to close is when being a professional pays off, because transactions can blow up for several reasons, such as buyer gets cold feet, landlord rejects buyer, seller changes their mind, and many, many more reasons. Selling a home, once the buyer has loan approval and apart from inspections, basically goes on auto-pilot once contingencies start being removed, but selling a business involves constant problem solving and negotiating that can only be learned through constant trial and error through years of experience.

In California in order to represent a business for sale, the business broker must hold a California real estate license. That means that I am legally allowed to sell and lease houses, commercial buildings, and land, engage in property management, and various other activities, including selling businesses. But, just as one doesn't visit a dermatologist for an irregular heartbeat, one shouldn't use a residential or commercial real estate agent to sell a business. As in medicine, law, and most other professions, experience and specialization count ... for a lot.

For example: We are presently offering a business for sale that also includes commercial property and residential property. It's complicated. My area of expertise is businesses. So I have partnered with a well-established brokerage office with expertise in both residential and commercial real estate. Together we are providing the seller with the very best representation, with each broker handling the parts we know best.

In California in order to represent a business for sale, the business broker must hold a California real estate license. That means that I am legally allowed to sell and lease houses, commercial buildings, and land, engage in property management, and various other activities, including selling businesses. But, just as one doesn't visit a dermatologist for an irregular heartbeat, one shouldn't use a residential or commercial real estate agent to sell a business. As in medicine, law, and most other professions, experience and specialization count ... for a lot.

For example: We are presently offering a business for sale that also includes commercial property and residential property. It's complicated. My area of expertise is businesses. So I have partnered with a well-established brokerage office with expertise in both residential and commercial real estate. Together we are providing the seller with the very best representation, with each broker handling the parts we know best.

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