5 Things a Business Broker Knows That Your Real Estate Agent Doesn’t

When you decide to sell your business, or to buy one, some people will tell you to just use a real estate agent. After all, their commissions are cheaper and you have to sell the property anyway, so why hire both? But it turns out this isn’t the best advice. In many states a business broker has to have a real estate license, so there is no need to hire both. And there’s a lot that a business broker knows that is necessary for buying or selling a business. And those are things a real estate agent doesn’t know.

Business
The primary difference between a business broker and a real estate agent is what they sell. A business, even with property included, is not a house. It’s not even a commercial property sold alone. A business is a machine for producing work, value, products, services. It is a functional thing, not just a piece of land or a building. To draw an analogy, businesses are like cars and real estate is like a garage. You wouldn’t hire a general contractor to fix your engine, or a mechanic to put a roof on. Business brokers understand businesses. Many have run their own business. Let someone who knows how it works help you buy or sell.

Pricing a Business
The value of a business is determined in a much different way than a house. Houses rely on location, construction, and amenities. A business is valued based on financial reports, assets, and customers. The skills needed to determine the right price of a business are vastly different than knowing the price of a building and business values fluctuate much faster and more dramatically than house prices. They move based on completely different factors and business brokers are aware of these and track them.

Who Buys Businesses
Another critical difference is in who is buying. Buyers for businesses are going to be involved in the running of the business. Buyers of homes are looking for a place to live or an investment property. And with investments, the buyer is looking for something that will bring a return passively, with little work on the part of the buyer. Knowing the right kind of buyer is part of the job for business brokers. Most already know of prospective buyers.

How to Advertise Confidentially
Advertising businesses and property for sale work completely differently. Property can be advertised by posting signs in the yard, photos of the inside and out, and open houses to tour them. These are not viable options for businesses. The value of a business can suffer if it becomes known it is for sale. Business brokers must market businesses confidentially, without revealing the identity of the business until after the prospective buyer signs a non-disclosure agreement.

How to Close
The closing process has a few slight similarities, but the differences far outweigh them. One example is the due diligence process. For businesses, a broker must review financial documents with a good understanding of assets, liabilities, cash flows, and more. This process can take much longer and be more intensive than the one for a property sale.

This only skims the surface of the areas where business brokers have expertise real estate agents just don’t need. In order to make your sale or purchase go smoothly, it’s highly recommended you hire an expert, a business broker, to complete the transfer. You can contact the Sunbelt Team to find more information or to hire a business broker.

Don Pippin Jr CBI CMSBB
Certified Business Intermediary