Sellers and buyers of businesses don’t necessarily understand the differences between the unique practices of business and real estate brokers.
The two practices are unique, using different methodologies. However, the real estate regulations are good ones to have as guidelines for what I do.
Business brokering has its own nuances, ones that many real estate professionals (RE) don’t know. Thus a perfect partnership opportunity exists to work together.
There are a number of places where the two intersect.
- BBs have buyers from out of town who need homes…RE referral.
- BBs have sellers wanting to leave town…RE referral
- BBs have sellers wanting to lease or sell their commercial building along with the business…RE referral. (More on this later.)
- BBs want to sell or buy a house.
- REs have sellers wanting to sell their business…BB referral.
- REs have buyers wanting to buy a business…BB referral.
- REs want to buy a business.
While some of the same sorts of techniques are used, they can vary greatly.
- Valuing property and valuing businesses are entirely different.
- Marketing can have the same fundamental techniques, usually in different places. The property address is often if no always used in RE work. Usually the business-for-sale process is very closed, not using the name of the business. Confidentiality forms are the norm in BB, not the exception. A BB and their seller are quite vigilant about confidentiality.
- Financing has different twists and turns, though can be challenging in both. Owner financing may be more prevalent in business brokering.
Ideally the two professionals collaborate, making life easier for each and better for their clients.
Usually, when the business is for sale with property associated with it, the business is the marketing lead and the property is an asset that is managed with the business sale. In my practice the RE values and lists the property. The BB lists the business and manages all of the marketing. The RE manages the paperwork to ensure proper transfer of the building in the offer. An attorney closes the transaction incorporating the various agreements from RE and BB.
Each BB and RE receive their own commission and often the rates are different.