12 Simple Tips for Selling your Rent Roll Business

We all know the difference between selling a well presented, attractive property to a poorly presented, unkept house. Buyers are far more attracted to a quality home and more likely to pay a premium price. Sometimes we ask sellers to put on their buyers hat and consider their homes worth and presentation through those eyes.

Selling your business is no different.

The presentation of your business to the market is vital to achieving your desired outcome.  A buyer will also require written evidence of all the information provided. They will take nothing on face value and will be receiving advice from their solicitor, accountant, bank manager and possibly friends and family prior to making any decisions. We need to present the property for sale in a method to convince all parties of the value of your business.

Recently the following article gave some advice to sellers regarding what a buyer is looking for in the business purchase process.

What Does a Buyer Look For?

Most purchasers buy a business, which they hope will generate their major source of income. As such, prospective buyers will have many questions about key areas of your business, such as:

• How long the business has been operating successfully?
• Can the business continue to operate successfully after the take-over?
• Will the seller provide training for the new owner?
• Quality, price and reputation of the business’s goods and/or services?
• Are the employees skilled, and will they stay with the business after the sale?
• Is the plant and equipment in good order?
• Are the financial records accurate and well maintained?
• How much money is owed by the business, and will the buyer take on liability for any debts?
• How much work is involved in running the business?
• Is the business worth the asking price?
• Why is the business being sold?

Real Estate Agency Sales provides these 12 Tips to selling your Real Estate Agency:

1. Present your business professionally.

Ensure it is tidy, clean and perfectly presented. Update your window display ensuring no old photo’s or window cards remain, remove all the clutter from the reception area plus vacuum and clean the office. Your website should also present your business professionally and accurately. Ensure all links work, staff photos and details are up to date and all the properties are featured.

2. Provide as many details and as much data as possible.

The buyer may not be a local and providing accurate information will verify the benefits of purchasing your business.

How many homes are in your area?

How many agents are in your area?

What is the average sale price for your area?

What type of property do you sell? Homes, apartments, townhouses, land, development stock etc.

What is the current number of listings available in your business?

What is your advertising cost recovery ratio?

How much commission per sale do you receive on average?

Provide as much information as possible to positively reflect your business in the current market to the purchaser.

3. Tell a story about the business.

How long has it been open and how long have you operated the business? What are the businesses key Points of Difference? What are the growth opportunities and what services do you provide?

This information will provide genuine value to the purchaser and allow them to make a decision quicker if they perceive good value.

4. Ensure the business meets all licensing and legal requirements.

Employee files should be accurate and current plus all Superannuation and Tax obligations met. Ensure your obligations under the PAMD are complete.

5. You will need to consider whether to discuss the impending sale with your staff.

If you choose to notify the team then do so in a team meeting where everyone finds out at the same time, explaining your reasons and dealing with their potential issues.

Within 24-48 hours meet with your staff individually to discuss any concerns they may have and provide assurance to the best of your ability about issues such as their position, their salaries and the natural changes a new owner may implement.

6. The buyer will require certain information without which they will not proceed.

A current Profit and Loss from your accountant is essential. A buyer will also require an Inventory list of all equipment included in the sale. All leases of equipment need to be provided and assignments will have to be organised.

7. A buyer will need to know certain information from your Property Management division.

How many managements in your portfolio?

What is the av. Rental fee you charge?

How many multiple owners are there and how many do they own?

What suburbs are the properties located in?

What is the total management fee income?

Are there any commercial properties being managed?

Do you have any holiday lettings?

How many properties are in arrears? (number of and % )

How many properties are vacant?

Are any Landlords considering selling?

To maximise your sale price ensure all properties are achieving at least market rent, focus on tenanting the vacant properties and commit to reducing the arrears.

8. You will need to provide details about the staff within the business. How long have the staff been employed by the business and what training have they been provided? What salaries are they being paid and are there any outstanding holiday or long service leave entitlements? Will the staff remain with the business upon the sale?

9. Provide a copy of the lease

Please provide a copy of the lease for the premises to confirm the legal obligations under the arrangement and to assist in arranging the re-assignment of the lease. Has the lease been registered and what are the contact details for the Landlord?

10. If your business operates as a franchise what are the obligations to the franchisor?  What exit costs apply to you by selling the business and what is required of the purchaser?  Does the buyer need to be approved, which almost certainly will be the case and what if the buyer wants to operate without that franchise system?

11. What part does technology play in your business? 

Do you need to supply training to operate your website? What software do you use and how do you communicate with your database? Does your business provide a newsletter and how may people receive it?  What other forms of technology do you use?

12. Finally – what settlement conditions do you require and what about the conditions a buyer is likely to impose upon you?

A purchaser almost certainly will include a clause which will restrict you from operating within the industry or the department which you are selling (ie Property Management) for a period of time and within a certain radius of the business. A retention period will also apply in relation to the rent roll.

What settlement period will you require and what deposit will you ask for? You need to organise the solicitor you will use for the sale process and they will need to operate a Trust Account for holding the retention funds if applicable.

And one last essential thing – Contact Kevin Hockey at Real Estate Agency Sales to get the right advice and access to a large database of genuine buyers. Our experience will guide you through the process and your confidentiality will be protected at all times. Contact Kevin direct on 0413 879 986 or email kevin@khbs.com.au.

Real Estate Agency Sales specialises solely in the sale of Real Estate Agencies and Rent Rolls, that’s all we do. Contact us on 3266 4242 or kevin@reas.com.au.

Please note – This article is not meant to be considered as advice and all information should be carefully considered before being acted upon. This information should be considered in conjunction with your own specific circumstances.

Are you considering selling your office or rent roll? Then our 12 Simple Tips for Selling your Business is the perfect starting point.

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