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Lately, it seems I get a phone call every other day from someone either thinking about selling their real estate company or from someone who is trying to buy a real estate company but is having a hard time getting it done. I tell both sellers and prospective buyers that it’s all about their motivation.

“Why would you sell your real estate company?” If you don’t know that answer to that question, chances are you’ll have a hard time getting a deal done.

Selling your real estate business is TOUGH. It’s your baby, you have a lot invested, you have employees and/or family members to worry about, you worry about agents leaving, what you’re going to do for a living after you sell, what the buyer is going to do with your company, etc.

Brokers, you need a very clear understanding of your motivations in order to successfully sell your real estate company. Are you…

  • Burned out, ready to do something else or retire?
  • Not making enough money, and/or you think someone else could do better than you have?
  • Convinced you can make more money as a real estate agent rather than running your real estate company?
  • Lacking the funds, and/or energy, to do the things necessary to be successful in today’s market?
  • Looking to pursue a different opportunity?
  • Looking to be part of something bigger?
  • Held back by many other personal or business reasons and need the change?

Realistically, unless you have a profitable, big real estate company with large market share, you’re probably not looking at a huge payday. This is why all other motivators need to be taken into account. You also have to know what you’d do if you successfully sold your real estate company.

Too many brokers don’t know what they’d want to do after they sold their real estate company. This is a bigger problem than you might imagine.

So interested buyers need to take great care as to how they approach a potential seller. If you’re not aware and respectful of all the things on a seller’s mind, you could likely put yourself in a position where it’s all about the money.  Or you might kill any chances you would’ve had to get the deal done.

I worry when I hear about companies making offers without digging deep into all potential motivators. I always advise buyers to take a lot of time planting seeds of concern. If a seller recognizes you’re interested in what drives them to even engage in a conversation, you will be much better off.  The conversation will be about more than multiples, down payments, and other deal terms.

It’s not that much different than why someone would sell their house and how reasonable they will be regarding asking price. Don’t your best agents spend a lot of time determining motivation and asking questions before going for the close? Why wouldn’t you do the same with a broker selling their real estate company?

View this original post on the PCMS blog.