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Can you buy or sell an entire book of business? Yes and here’s how.

09/23/2019

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Marlene Baugh has been a real estate agent in Virginia for nearly 40 years. In that time, she has served families across multiple generations, built deep and lasting relationships with her clients, and established a successful, trusted business with a team that includes her spouse, her sister, and her niece.

“It’s not just a job for me. It’s very personal,” she said. “This is my family. My clients are my family, and I could never just walk away from all that.”

Like Marlene, many veteran agents don’t want to see all their hard work vanish into the ether the day they hang up their license. But 31% of agents have no plan for retirement. They haven’t thought through what’s next for their business.

“We’re terrible about that as an industry,” said Richard “Coach” Fino, Director of Agent Success at Long & Foster | Christie’s International Real Estate. “So many senior agents have absolutely no exit strategy.”

Meanwhile, emerging agents face the daunting task of breaking into a highly competitive landscape. And even more established agents, with five or ten years’ experience, want effective ways to expand their team and their reach.

So one group is looking to move on. Another is looking to move up. What if they could help each other?

They can. The term for this is succession planning. It’s a purposeful method of either selling or acquiring an existing real estate business. As Fino noted, “the insurance industry has a program, and so does law. But nobody had put together an actual program or a platform to do that for real estate — until now.”

First, find the right fit

Succession planning is like match-making. There should be an overlap in key areas, such as work style, values, and mission. The acquiring agent and the senior agent should share similar ideals and goals and have a clear understanding of what the other is hoping to achieve.

“There is nothing of greater importance than the match,” said Fino. “At its heart, this is about transferring the trust of a client database from one agent to another. And there can be no real, authentic transfer of that trust unless the agents themselves trust one another.”

For Baugh, that fit was found in the form of Nancy Willson through the Long & Foster Agent Succession Program. With 15 years in the business and a team that includes her mother, Willson had ample common ground with Baugh in their shared commitment to their clients and family-first approach to business.

Like Willson, agents looking to buy into a business should search for a senior agent that has an impeccable reputation in and outside the industry, and a stable financial landscape that demonstrates sustainability in an evolving market.

Retiring agents like Baugh, on the other hand, should align with a buyer that has the desire to nurture relationships and grow an existing business, as well as compatibility with your support staff, team, and the structure of your business.

Part of that fit discussion is asking more questions than either party might feel comfortable with. Of course, Fino acknowledged the irony in the situation: the same agents who go over every detail of a real estate transaction with a fine-tooth comb will enter into a succession plan over no more than a cup of coffee and a handshake. And it’s often downhill from there.

“Many people just don’t know what to ask,” said Fino. “They don’t know what they don’t know they don’t know. They make a lot of assumptions, and without fail, something comes up.”

Craft a strategic buyout plan that serves both sides

Buying and selling a real estate business isn’t like a residential home transaction. The seller doesn’t always just hand over the keys and walk away, with the new buyer moving right in.

Instead, there is a detailed buyout plan that should be carefully constructed based on the needs and goals of each party.

Fino listed off just a handful of the questions buyers and sellers need to explore. “What works best — an all-in buyout? A three- or five-year leveraged buyout? Do you want to step back gradually or close the door and move on? Do you want a mentor to help you move into your new role or a turnkey business that is instantly yours?”

And based on the answers, you can create a timeline for the transition. Plan an announcement event. Decide who’s covering what marketing expenses. Organize a meeting with key clients, and create a co-marketing brand.

As exciting as it is to plan the acquisition of a business, it’s also well worth considering what happens if either party, for whatever reason, has a change of heart. The dissolution of the agreement should be part of the plan from the beginning, clearly defined so both buyer and seller have an easy and systematic planned departure if it isn’t working out.

For Baugh and Willson, their succession plan is less about one agent retiring and another taking over. “This is more about two businesses coming together to ensure a level of excellence and care for our clients,” said Willson. “Because in the end, we both want what’s best for them above all. And that’s why I’m 100% certain this will be successful.”

The Long & Foster Agent Succession Program is an exclusive program that helps sales associates acquire the businesses built by established professionals who wish to leave real estate. The program vets candidates, conducts training, and provides a structure for retiring agents to receive financial benefits as their businesses continue under new leadership. The program includes professional classroom training, coaching, and mentoring through the transfer process. Learn more today.

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