6 Differences between Business Brokers and Real Estate Agents

1. Areas of Expertise

Real Estate Agents focus on selling physical property and land. They sometimes sell businesses with the property, but it’s not their area of expertise. Business Brokers focus on selling businesses but sometimes sell the property with a business. If you are selling both your business and your property, you should get an understanding of the value of the business as a separate entity from the property. If the business is worth more than the property, you are better off using a business broker. If the property is worth significantly more than the business, you may be better off using a real estate agent.

2. Confidentiality

Real estate agents will typically post the location of the real estate on a public database such as a Multiple Listing Service (MLS). Business owners don’t want their employees and customers to know that they are selling a business. Hence, they turn to Business Brokers to advertise their business in such a way that the location and name of the business is not provided until interested buyers sign a confidentiality agreement.

3. Evaluating Financial Information

Business Brokers need to have experience reviewing financial information such as tax returns, profit and loss statements, and more to provide a valuation and pricing of a business. Realtors are not usually trained in evaluating financial information. In addition to pricing, buyers also use financial information to evaluate whether or not they are interested in a business. Business Brokers need to understand financial information in order to position the business for sale and answer questions from buyers.

4. Qualifications of Business Brokers & Realtors

Real Estate Brokers need to be licensed in the state where they are selling property. In most states, you don’t need a license to sell a business.  For both real estate brokers and business brokers, it’s important for sellers to feel comfortable that the broker has experience selling the type of business that they have. This will aid in the sale of the business because the broker will then have contacts for prospective buyers for that type of business and will be able to communicate effectively about the industry and business that they are selling.

5. Qualifying Buyers

Business Brokers will spend more time qualifying buyers than Real Estate Agents. To show a property can sometimes take only 5 minutes, and the seller’s time is not usually needed so that Real Estate Brokers can show 10 properties in a couple of hours. Whereas in business sales, one appointment might take 1 to 2 hours or more of the seller’s time. So Business Brokers must qualify business buyers to make sure that they are a good fit to take up their client’s time. In addition, the seller doesn’t want to provide information on their business to a large number of people. So they look to Business Brokers to narrow down the number of people that they meet with. Business Buyers need to understand that they may not be able to meet with every business owner that they are interested in meeting with unless they are qualified to buy that business, both financially and skill set-wise. They will need to provide information on their qualifications to the Business Broker before meeting with a business owner.

6. Working with Buyers

Real Estate Brokers often represent buyers. They will find out what the buyer is interested in and then show them properties that fit their criteria. Business Brokers usually do not represent buyers. They will typically only focus on getting the right buyers for their specific listings. So business brokers will not typically perform searches for buyers but will see if a buyer is interested in specific listings that they have. This makes it important for buyers to reach out to different business brokers to find the right business that they are looking for. A good resource that we recommend buyers use to search for businesses for sale represented by different business brokers is BizBuySell. When you find a business that you are interested in, you can contact the business broker that has that listing. They will normally send you a confidentiality agreement that will need to be signed before releasing information on the business.

Real Estate Agent vs. Business Brokers

Hopefully, this article has helped you understand the differences between Real Estate Agents and Business Brokers.

If you are interested in buying a business, please view our businesses for sale. If you are interested in selling a business, please fill out our contact form for a confidential consultation.