Real Estate Coaching

Real Estate Company Valuation

There may come a time when Real Estate Brokers will want to retire or just want to leave the business due to economic or heath issues.

The question of company valuation will have to be addressed.
There are many factors that must be considered in determining company valuation.

Here are just a few examples:
• Is the company profitable?
• How many years has the firm been in business?
• Does the company have a defined database of past customers?
• Is the company associated with a Franchise Organization?
• If the company is a Franchise what is the Transfer Fee?
• Are there multiple transfer fees for each branch office?
• Does the Franchise Company have an option to purchase?
• If it is a Franchise what is it’s ranking among the competing offices?
• Is the real estate office leased or owned?
• What is the present company market share?
• Are any additional ancillary businesses included in the sale?
• What is the average productivity of the Sales Agents?
• How many agents are associated with the company?
• Will management stay for a determined time after the sale?
• How many sales agents will stay after the sale?
• What is the relationship with the state real estate commission?
• How many E & O claims has the company incurred?
As you can see there is much to think about.

A key question is profitability. If a firm is not profitable then we know that the seller has a motivation the buyer can either accept or decline. There lies the Good Will Factor. How do you put a Purchase Price Multiple on a Negative Net Profit? Can it be done? Yes!

It just may be that the buyer will pay a price to merge it into their current company or to just shut the competition down . The negotiating skills of both the buyer and seller will ultimately determine the value of the company.

If you need assistance for further input on buying or selling a real estate company call me for a free consultation at 888-393-1230.