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.