The bottom line...preparation, planning and the ability to quantify the bottom line.

How do you evaluate a personal service business? What determines the value, and what someone would be willing to pay for it? What is the "present worth of the future benefits?"

Look at a property management practice...the revenue can be quantified. Having said that, what do property management practices sell for? One times the annual gross revenue? 1.5 times the annual gross revenue? (a property management practice can also be a great source for future commissions).

When one sells income producing real property, it is usually priced by a factor of the net income and the income is examined in three areas:

Quantity - the amount collected
Quality - financial stability of the tenant
Durability - term of tenancy (long term leases are generally preferred as they should make for lower future vacancy and thus, higher overall quantity)

A real estate sales business is a little more difficult to quantify. I think however, it is important to have more than a digital database of names and contact information. Other facts about the client base should be important factors as well.

Amount of new business is part of the "value equation" as well as repeat business from your database. To estimate a value of your real estate business, examine the idea of "Quantity, Quality, and Durability."

Contact and Client Management Software - Top Producer and AgentOffice are not the only options and often, because of their steep learning curve, may not be the best choices

The concept of bringing in your successor over time also makes some sense to optimize the transfer of your business because you are in a personal service business and your database alone is not very personal. A "turn over process" will maximize the success of the person buying your business which should mean a greater value for you in the sale.

And let's not forget the terms of the sale...how much down, amount and number of payments, etc.

I am an advocate of preparing to maximize the asset one builds in their business over the years and to do so requires, imho, a lot more thought, preparation and detail than I have heard discussed by many who advocate the "idea" of selling your real estate business. It is a sound "idea." If one wants to truly maximize this opportunity, the more you can determine long in advance of the sale will help you with the process and the pricing when the time comes to "cash in" (or cash out :-).

Saul