Why Realtors Do Poorly Trying to Sell Businesses
Realtors, who attempt to sell businesses, in particular those with no real experience selling businesses, significantly struggle and usually have poor results. There are a number of reasons why. The more important ones are generally:
- Realtors seriously over price businesses listed for sale by them. This is because they try to price businesses listed for sale using pricing formulas that are effective in fairly pricing commercial income producing properties. Overpricing scares away buyers, as they see no inherit value to be gained by buying the business listed for sale at the over inflated asking price.
- Realtors are Realtors. As they are not active and aggressive in selling businesses listed for sale, they do not have much in the way of pool of interested business buyers to whom they can present the business for sale. Business Brokers of Louisiana with it’s many offices in Louisiana has a data base of over 14,000 buyers, sorted by types of businesses desired. These potential buyers have inquired about buying one or more businesses listed for sale. The international system of over 250 Sunbelt Business Broker offices worldwide, to which we are a part, has tens of thousands of potential buyers in their databases. Profiles of all new businesses listed for sale are immediately emailed to interested buyers.
- The vast majority of realtors do not know how or where to advertise effectively to find business for sale buyers. Utilizing our expertise, Business Brokers of Louisiana marketing efforts attracts hundreds of buyers weekly inquiring about our businesses listed for sale. A company owner considering listing its business for sale with us is welcome to come by our office and preview our files of potential buyers.
- There is a tried and true axiom in the business brokerage industry that states that 90% of buyers of businesses listed for sale that buy a business, will buy a business other than the one that they showed initial interest in. Realtors rarely have more than 1 or 2 businesses listed for sale. So, if the buyer is not interested in the realtor listing, the realtor has little of anything left to present.
- Business Brokers of Louisiana maintains a inventory of around 400 businesses listed for sale in Louisiana and surrounding states(www.sunbeltnetwork.com/BR) and the international Sunbelt Business Broker system maintains an inventory of around 8,000-9,0000 businesses listed for sale. (www.sunbeltnetwork.com)
- Another axiom in the business brokerage industry is that approximately 40% of business buyers come from outside the location or area where the business listed for sale is located. The vast majority of realtors have little or no way to find or recruit buyers from out of the area. Whereas, our offices and the international Sunbelt Business Broker system markets nationwide and worldwide.
- Approximately 90% of all businesses sale transactions have a financing component. The vast majority of realtors don’t know how to secure financing for business sale transactions. The typical realtor that is used to selling real estate, will send the potential real estate buyer to the local bank or mortgagee broker to get funding. This basically is all they know how to do. It is totally non-productive for businesses for sale. Banks and mortgage lenders with few exceptions do not lend money for the purchase of businesses listed for sale. At Business Brokers of Louisiana, we have a large portfolio of lenders that specialize in funding business sale transactions. We are very effective at getting funding for business acquisitions.
- The vast majority of realtors do not understand or are they able to decipher business financials or tax returns. The details of the financials and tax returns need to be accurately and appropriately presented to a potential buyer. This is so they can make an accurate assessment of the viability of the business listed for sale, the worthiness of the potential investment and the accurate value of the transaction. We are exceptionally competent here.
- Many realtors do not like to list businesses for sale, which they commonly refer to as “business opportunities”. The knowledgeable ones understand that their errors and omissions insurance coverage that they are required to have for real estate transactions does not cover them in handling businesses for sale if the sale does not include real estate. Approximately 90% of all businesses listed for sale do not include or own the real estate. They rent or lease. In the Sunbelt Business Broker’s international system, agents/brokers have $1,000,000 in E & O insurance coverage. This is important if an agent/broker makes a mistake or inadvertent misrepresentation and the buyer or seller sues after the fact.