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Appraising a Real Estate Office
5 Crucial Steps to Sell Your Business (Business News Daily, Mar. 28, 2024)
Potential buyers will scrutinize your business’s financials, as that forms the basis of their valuation. Therefore, the more information, statements and other documentation you can gather, the better.
How to Use EBITDA Multiples to Determine Your Business’s Sale Price (IAG, Mar. 3, 2024)
EBITDA multiples are instrumental in comparing profitability across different corporations and industries. For example, while a retail business might be valued at 3-4x EBITDA, a real estate firm could command a multiple as high as 14x EBITDA. Such comparisons are essential for those looking to sell a business, as they help in setting a competitive and fair sale price.
What’s Your Exit Plan? Here’s How to Sell Your Real Estate Brokerage (The WAV Group, Aug. 10, 2023)
Probably the biggest and most important consideration is the price. What seems fair? What’s the current business valuation, and what adjustments might you request or offer to that valuation to arrive at a price that works for both the buyer and you as the seller?
Another important question to answer surrounds the timeframe of the transition. How long do you want to stick around and help? If you stay on board indefinitely (as a sales agent, for example), then what will your new role and title be?
6 Things to Consider Before Selling Your Business (U.S. Chamber of Commerce, Apr. 12, 2023)
Some business owners choose to sell their company before they’re emotionally ready to let go; however, the sale shouldn’t proceed unless the owner is absolutely ready to transfer ownership. Don’t rush the process — after all, a lot of blood, sweat, and tears went into building the company from the ground up and forming relationships with team members and customers.
Here’s How Brokerage Valuation Works (RTC Valuations)
The bottom line is the unique characteristics of the residential brokerage industry support the use of a trailing 12 month basis for valuation. As such, brokerage valuations can wildly swing from year to year depending on a firm’s ability to effectively recruit, retain and develop agents, all the while being beholden to the state of the housing market. Certain normalization measures can be taken to preserve value, but it ultimately comes down to, “What have you done for me lately?
4 Simple Steps to Valuing Your Small Business (Business.com, Feb. 21, 2023)
Step 1: Forget about capital assets when valuing your business.
Step 2: Work out profitability by being aware of gross income and all outgoing payments.
Step 3: Calculate the Value
Step 4: Factor in Your Market Valuation
Choosing a Business Appraiser (BizBuySell)
“Business appraisers have widely different backgrounds and different capabilities resulting from their unique experience and specialized educational background. Most business appraisers have a professional designation after their name that indicates the designations they have earned. The ones you are most likely to see that require serious study and actual appraisal experience are issued from reputable and recognized trade associations.”
Selling Your Book of Business
4 Steps to Buy or Sell a Retiring Agent’s Real Estate Business (HomeLight, Aug. 3, 2022)
“I would say, generally, just as a rule of thumb, the more engaged and helpful and supportive the retiring agent is in helping you and bringing more value to that client list and adding people to it, keep paying them for that. I mean, my dream scenario is that they’re helping me do more. I would much rather pay 25% forever and have 10 new clients a year that I wasn’t gonna get than get 100% of a database that is limited. I think the more supportive and engaged they are, the more the money could be in the longer term.”
What is a Book of Business? Definition & Examples of a Book of Business (The Balance, Sep. 17, 2020)
“Your book of business should include all customers or clients you have worked with in the past. As you acquire a new client, add them and their information to your book of business. Your book of business is ideally ever-changing and evolving, with new information added about your clients as your relationship progresses.”
How to Sell a Book of Business (BizBuySell)
But for some business owners, selling a book of business can be a better strategy. If your growth has slowed, and you’re not turning the same profit you once did, finding a buyer can be challenging. However, you might find a ready pool of potential buyers for a book of business.
Selling Your Website
How to Sell Your Website or Online Business in 2024 (Complete Guide) (Bluehost, May 15, 2024)
Before selling your website, it’s important to consider ways to make it more valuable to potential buyers. This could involve simplifying processes, increasing traffic, boosting revenue, optimizing content for search engines, and improving the site’s design. By addressing any issues and building on its strengths, you can attract more customers and get a higher price for your website.
How to Sell a Website for Maximum Profit in 2024 (Hostinger Tutorials, Mar. 14, 2024)
“When it comes to increasing site value, relying on a single traffic source is not ideal. For example, focusing solely on PPC campaigns. While it’s faster to gain traffic using paid advertising, solely depending on it signals to buyers that they might need to spend a lot on marketing. This is because the more customers you attract from paid advertising, the more money you’ll spend.”
How to Sell a Website – 7 Steps to Sell Quickly (Cloudways, Mar. 11, 2024)
- “Understand your audience
- Know what your website’s worth
- Create a lead funnel
- Research marketplaces for buying and selling websites
- Optimize your profits before making a listing
- Learn to approach interested parties the right way
- Get the right statistics to present to buyers”
How to Sell a Website in 2023 and Get the Price You Deserve (Kinsta, Sep. 26, 2023)
“You need to invest the time to take your website to its peak. You also have to lay the foundation for new ownership before reaching out to buyers. If you fail to do this, you will struggle even to find a willing buyer in the first place. The more time, money, and effort you put in up-front, the easier the sale will be. A well-managed online business with automated content creation processes and fulfillment is much easier to sell than an improvised mess.”
Succession Planning
The US Real Estate Industry Workforce Faces a Retirement Cliff (Deloitte, May 29, 2024)
Real estate organizations should act on the impending retirement cliff now and prioritize fortifying their talent pipelines. This will likely require proactive board-level succession planning, attention to growing and developing younger leaders, and investment in the right technologies that can identify or fill in where potential control failures may exist should key stakeholders retire. Collectively, these efforts can help the industry move forward and bridge the transition to the next generation of real estate.
Succession Planning: The Unseen Catalyst For Business Growth (Forbes, Mar. 28, 2024)
"Succession planning is more than a contingency plan; it's a growth strategy," states Bobby Mefford, CRPC, owner of Mefford Wealth Management. “Initiating this process well before the anticipated need, ideally 5-10 years in advance, allows business owners to meticulously craft a roadmap that aligns with both their personal retirement aspirations and the business's growth objectives.” It’s important to integrate succession planning into the broader business strategy to establish a clear vision for the company's future.
Dos and Don'ts of Creating an Effective Succession Planning Strategy (Kreischer Miller, Mar. 19, 2024)
Creating an effective succession strategy entails more than just internal planning; it requires the active involvement of key stakeholders.
Engaging stakeholders from various levels and departments fosters buy-in and support, enhancing your succession plan’s overall ease of transition and implementation. Moreover, involving stakeholders early on enables the identification of potential gaps or challenges in the succession plan, allowing for proactive solutions and adjustments.
Succession Planning Basics: How It Works, Why It's Important (Investopedia, Jun. 11, 2024)
Businesses may want to create more than one type of succession plan. An emergency succession plan is put in place when a key leader needs to be replaced unexpectedly. A long-term succession plan, on the other hand, helps the company account for anticipated changes in leadership.
How to Win the Succession Game (Chicago Agent Magazine, May 2, 2022)
“There are a number of resources through Realtor associations and brokerages on how to develop a succession plan, but there is no one-size-fits-all solution, and specialists in the field are few and far between. Nick Krautter, author of “The Golden Handoff: How to Buy and Sell a Real Estate Agent’s Business” and CEO of Portland, Oregon-based City & State Real Estate, bought his first book of business from an outgoing agent in 2010 and over the next few years, added several more to his roster. “When I started doing this, I assumed everyone was doing it,” he said, noting that he was surprised to learn how little guidance there was available for succession planning.”
Succession Planning for Real Estate Brokerages (National Association of REALTORS®)
“Succession planning is an important issue for all real estate brokerage firms to consider. Having an emergency plan will help protect the firm’s clients and assets if the managing broker becomes unexpectedly incapacitated. A planned succession will allow the firm to seamlessly transition existing business to a new business broker, but the process for transferring the listings will vary by state.”
A Beginner's Guide to Business Succession Planning for Small- and Mid-Size Business Owners (ADP)
Your succession plan can prevent the loss of critical knowledge after someone leaves and conflict between employees suddenly vying for the open position. If your family members are part of the business, your succession plan can even guide the next generation of owners.
The Small Business Owner’s Guide to Succession Planningpdf (SCORE-MassMutual)
- A good succession plan can help:
- Transfer ownership when the time comes
- Maintain your lifestyle in retirement
- Provide for your heirs financially
- Prepare the business to handle unexpected events
Web Resources
Close or Sell Your Business (U.S. Small Business Administration)
SBA provides information on planning your exit, steps to closing a business, selling your business, transferring ownership, and more.
The Institute of Business Appraisers
In valuing your business, consider working with an evaluation professional. The Institute of Business Appraisers offers a certified business appraiser (CBA) designation for those meeting the group’s education and performance criteria.
eBooks & Other Resources
eBooks.realtor.org
The following eBooks and digital audiobooks are available to NAR members:
The Art of Selling Your Business (Audiobook)
Business Valuation and Taxes (eBook)
Business Valuation for Dummies® (eBook)
Buying and Selling a Business: A Step-by-Step Guide (eBook)
Career Planning and Succession Management (eBook)
Effective Succession Planning (eBook)
Exiting Your Business, Protecting Your Wealth (eBook)
Inside CEO Succession: The Essential Guide to Leadership Transition (eBook)
Journal of Property Investment & Finance, Volume 34, Issue 6 (eBook)
Selling Your Business for Dummies® (eBook)
Selling With Certainty (eBook)
Succession Exit Transition (eBook)
The Market Approach to Valuing Businesses (eBook)
The Small Business Valuation Book: Easy-to-use Techniques That Will Help You... Determine a Fair Price, negotiate Terms, Minimize Taxes (eBook)
Valuing a Business (eBook)
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