Has the time come to move on from your real estate business? Here’s how to exit if you don’t have a succession plan in place. 

In a perfect world, when the time came to exit your real estate business you would have the perfect plan and strategy in place, with everything completely organised. 

However, things don’t always go according to plan. If you find you need to leave your business and don’t have a lot of groundwork for a handover, or if your business has more than 100PUM (properties under management) and is too large for a single sale, there are still strategies you can apply. 

Generally speaking, you have one of two options which will help secure a sale or provide you with the freedom you need to move on in life. 

Find a buyer

Of course, finding a buyer is the ideal solution to exiting your real estate business. However, if you don’t have everything beautifully prepared and need to step out quickly, a traditional sale may not work. 

This is where some creative thinking is required. One option is to set up what’s known as Vendor Finance, and allow your buyer to pay you slowly over time. Taking this approach provides better flexibility for them as they do not need to secure a loan from the bank. The strategy also gives you an income which you can use to fund your retirement. 

Sometimes a buyer who purchases through Vendor Finance may request you stay on for a handover period. Doing so can give you time to organise your business, help your staff cope with the transition and provide the new owner with support while they get to know the ropes. 

A Vendor Finance agreement can work well for both parties, however, you need support to get it right. The initial amount of vendor finance required, terms, interest and final payment must be worked out and included in a contract of sale. It is also important to agree on what your buyer will offer as personal guarantees and security, such as insurance, should they fail to make payments. 

Make sure you have an experienced consultant and a lawyer working with you to cover the finer details and set up an agreement to help you reach your goals. 

Split your business

If you have over 1000 properties under management, you may find it challenging to find to a single buyer to take them all on. 

Again, there are options to ensure a sale. 

It may make sense to break your business down and sell it in parts. For example, you could isolate your rent roll and your strata roll before targeting different buyers who specialise in these areas. 

Another strategy many real estate business owners who are looking to sell a larger agency employ is to break their business down by location. List different rent rolls for each suburb and your buyers will be able to instantly build their rent roll without having to travel miles from home. 

Take the time to go over the most suitable ‘splits’ to attract interested buyers and get value for money from the sale of your real estate agency with an experienced consultant.

Plan ahead for the future

Not planning to sell at this stage? It still makes sense to begin work on an exit strategy. By keeping detailed and accurate financial accounts, structuring your business so it has value and having strategic growth plans in place, you can create a sought-after asset which will sell quickly. 

You have worked hard to build your business and you deserve your time off in the sun as a reward. By getting professional advice, you can ensure a sale you’re happy with and enjoy the next phase of your life.  

BDH Solutions are rent-roll agents with over 30 years experience in connecting the right vendor with the right purchaser. To stay up to date with our latest listings, register here.