Real estate agents often sell their business or sell the rent roll which forms part of their real estate agency business. They sell their rent roll because they take the strategic business decision to sell off the property management division and concentrate their efforts solely on the sales team.
When they sell the whole business it has been a historical fact that real estate agency sales departments attract either zero goodwill value or only a nominal goodwill value. This is because the industry has always felt that the goodwill associated with the sales team lies with the people themselves, rather than the office they work for. The belief has been that when a salesperson leaves the real estate agency to go to another agency that the historical database is held in their head and they will be able to contact past clients and convert them to the fact the salesperson is working for another agency. The other belief is that the only area of the real estate agency which is worth paying good money for is the rent roll or property management department of the real estate agency.
However, the advances in technology which see most real estate agents using sophisticated Client contact management systems with auto-generated alerts and email newsletters means that more and more, the agency is keeping control of the intellectual property of the office including client contact details and the sales data surrounding those past contacts.
It follows that the argument that a real estate agency sales department should be able to attract some goodwill value is now a strong proposition.
Rent Roll Valuations
Rent roll valuations are one of the most common valuations done by Business Valuer Network members. We value many real estate practices each year and have a broad database of
