Estate Agent fees

TomsMom

This is a little bit different to other threads as I am talking about selling a business - a small restaurant in a seaside town with living accommodation.

Does anyone know if fees for selling a business are any different from fees for selling houses.

Looming retirement is the reason for sale, the restaurant is successful, although mainly seasonally busy, out of season quiet.

E.G. Just testing the water, only one agent contacted so far who is out of the area but specialises in business sales. They want a "commitment" fee of over £800 which includes all advertising (Daltons Weekly mentioned), photos, etc. Then they want a 3.75% fee on completion of sale. This to me seems a lot as when we sold our previous house (quite a few years ago now) it was 0.75% fee. I would say that they are a well known name and very well established. The commitment fee was explained as necessary as past experience has proved that a lot of buyers pull out and money is lost regarding advertising, photos, etc. Fair enough, it is the 3.75% that we are more concerned about.

Is this a normal fee for a business sale?

How do we go about negotiating a better price?

We have yet to contact the local agents, only a couple here, who sell all manner of properties, mainly residential but the odd business too. Unlikely that local people would buy it (small seaside town) so it would probably be someone coming in like we did. So advertising in local paper not that effective in this case although agent's window display would be viewed by visitors to the town who would not buy a paper. We are also in an area where properties do not sell particularly quickly, it's not like being in a city where more people are on the lookout for property.

Any comments anyone please?

chickmug

What area are you?

A lot of folks on this forum feel that EA's are devious but they are not a patch on some of the very devious agents selling businesses. A whole different set of problems not the least of which is high up front fees and sting in the tail contracts whether they sell or not. Is it a freehold as the terms look like those being offered by Christies?

Forget your local agent as they wll not get the coverage you need as most that buy businesses move into the area assuming it is a nice seaside spot.

TomsMom

chickmug wrote: »

What area are you?

A lot of folks on this forum feel that EA's are devious but they are not a patch on some of the very devious agents selling businesses. A whole different set of problems not the least of which is high up front fees and sting in the tail contracts whether they sell or not. Is it a freehold as the terms look like those being offered by Christies?

Forget your local agent as they wll not get the coverage you need as most that buy businesses move into the area assuming it is a nice seaside spot.

Yes, it is Christies. Freehold. Successful business with spacious living accommodation.

Area north Wales coast.

dexters_mum_2

Our local agent, who sells business and residential property starts at around 2% for business premises.

However, through uni and through general ear to the ground stuff, I have heard of fees of being anything up to 4% in the UK :eek:

Conrad

Hey Tomsmum, my parents moved to Harlech, is that near you?

As for the fees I think they are fair, given how hard it is to sell a business and the amount of aborted sales they endure.
Ive bought some property in Germany and there a typical fee is 6.75%, and in the Bahamas 10%.

I think us Brits are a bit unrealistic when it comes to paying for other peoples time and effort, that is until it comes to our own pay negotiations of course!

TomsMom

Conrad wrote: »

Hey Tomsmum, my parents moved to Harlech, is that near you?

Yes Conrad, not very far away.

and the amount of aborted sales they endure.

Oh lordy _pale_

I think us Brits are a bit unrealistic when it comes to paying for other peoples time and effort, that is until it comes to our own pay negotiations of course!

I suppose we all want whatever it is at the best possible price. We're willing to pay for their time and effort as long as they do make a serious effort so we have lots of questions to ask before deciding who to place it with! We haven't checked out the local agents yet, and not having sold a business before we only have our old residential sale to compare and with that being 0.75% then this is obviously a big jump.

When we purchased this place, a good few years ago, we actually only found out about it because we were having a day at the seaside and saw it in the agent's window, not through any real effort on the local agent's part and certainly not advertised in Dalton's Weekly which we had been getting regularly, but then I suppose that might have been down to how much the seller wanted to spend on advertising.

TomsMom

dexters_mum wrote: »

However, through uni and through general ear to the ground stuff, I have heard of fees of being anything up to 4% in the UK :eek:

I think we'll have to practise our negotiating skills :rotfl:

chickmug

TomsMom wrote: »

I think we'll have to practise our negotiating skills :rotfl:

I would of thought 1.5% maximum would be a good ball park figure, Unless it is a cheap freehold in which case you may not get below 2%. Do not pay up front fees, insist of your seeing a copy of the contract before you decide and if you don't like it ask for a written variation. Ask them to supply, in writing, their marketing proposals to include, where will they advertise, how often, what sort of advert, ask for sample 'details of sale', look at their web site as some business agents sites are crap and some even more crap.

I would expect at minimum to see the ads in Daltons Weekly, on these web istes http://www.daltonsbusiness.com and http://www.businessesforsale.com

On the latter web site ask for them to include you on a premium advert slot which will cost them £15 pm + Vat but will bring in more enquiries.

Make sure the agent has real experience as a lot of Business Transfer Agents are franchisees and haven't bloody clue what they are talking about - just bull shitter salesmen. And the market is very very slow just like the housing market so if you really want to sell price it keenly.

Beware of long lock ins as the usaul is 6 months but some go for 12 months - you should aim for no longer than 12 weeks.

TomsMom

chickmug wrote: »

I would of thought 1.5% maximum would be a good ball park figure,

That makes better reading

Unless it is a cheap freehold in which case you may not get below 2%..

Being a bit thick here Not quite sure what you mean by a cheap freehold. The property is classed as a freehold property with restaurant on ground floor and living accommodation above and was purchased as such (like a freehold house). They are not two separate entities so no-one could buy the business separately.

Do not pay up front fees, insist of your seeing a copy of the contract before you decide and if you don't like it ask for a written variation. Ask them to supply, in writing, their marketing proposals to include, where will they advertise, how often, what sort of advert, ask for sample 'details of sale', look at their web site as some business agents sites are crap and some even more crap.

I would expect at minimum to see the ads in Daltons Weekly, on these web istes http://www.daltonsbusiness.com and http://www.businessesforsale.com

On the latter web site ask for them to include you on a premium advert slot which will cost them £15 pm + Vat but will bring in more enquiries.



Make sure the agent has real experience as a lot of Business Transfer Agents are franchisees and haven't bloody clue what they are talking about - just bull shitter salesmen. And the market is very very slow just like the housing market so if you really want to sell price it keenly.

Beware of long lock ins as the usaul is 6 months but some go for 12 months - you should aim for no longer than 12 weeks.

Thanks very much, very useful information and noted!

chickmug

TomsMom wrote: »

That makes better reading
Being a bit thick here Not quite sure what you mean by a cheap freehold. The property is classed as a freehold property with restaurant on ground floor and living accommodation above and was purchased as such (like a freehold house). They are not two separate entities so no-one could buy the business separately.

Sorry to confuse but if the asking price was £150,000 I doubt you would get a decent job under 2% or even more but if you are £300,000 or more I feel more optimistic you could get someone down to 1.5%. All agents are short of new instructions.

TomsMom

chickmug wrote: »

Sorry to confuse but if the asking price was £150,000 I doubt you would get a decent job under 2% or even more but if you are £300,000 or more I feel more optimistic you could get someone down to 1.5%. All agents are short of new instructions.

Thanks Chickmug, I understand now, long time since we done sell/buy so out of practice.

Our local agents aren't short of new instructions, just buyers :rotfl:

Christies are coming next week but we wont be bullied into making any decisions yet, we will also talk to the local agents to see what they have to offer, and will try to find more specialised business agents too.

The one thing we have already discussed between us (hubby and I) is whatever valuation they put on it we will ask if they expect to sell it at that price within a reasonable time scale considering the current market, we would rather price to attract serious buyers who can follow through than have it on the market for a few years.