As real estate salespeople near retirement or contemplate a lifestyle change, they may wonder if there is a way to cash out of their business building years. Because they aren't brokers, there isn't a franchise or an independent broker waiting to buy their goodwill. But buyers exist. New agents or salespeople new to the area may be wondering how they can develop a profitable practice. Is there a way for these sellers and buyers to come to a meeting of the minds?

Two salespeople, Colorado Realtor Alisa Hagner and North Carolina Realtor Sally Lancsek-Holt, tell how they met their goals on both sides of the table.

Alisa -- Buying A Real Estate Practice

Ten years ago, Alisa moved with her family to the Denver area. Working as a technology assistant to a brokerage, she taught early contact management software to salespeople. One agent approached her and said that she wanted Alisa's help with developing a database, so that she could sell her business.

"You can't sell a business out of a file," says Alisa. "As I got into the project, I got interested in buying the business myself."

The two women reached a seven-year agreement and based the sale of the business on the referral concept. The first year, Alisa would pay 30 percent to the agent on sales generated from the database. The second year, the percentage dropped to 25 percent, and to 20 percent the third year. Years four through seven were to come in at 10 percent.

"I was already an agent, so I had my own contacts," says Alisa. "We agreed that I would buy her database and that when I made a sale on one of her referrals, I would send her a check from closing.

The agent asked Alisa to forward the referral fees to a trust fund that she had set up for her special needs daughter.

The agent helped Alisa become known to her clients by sending them periodic letters generated from the contact management software, introducing Alisa and encouraging them to call her with their real estate needs.

The arrangement paid off for both. "The first year, I sent her over $25,000," says Alisa.

Before the terms of the contract were fulfilled, the agent passed away, but she was comforted knowing that her daughter would be cared for, says Alisa.

Sally -- Selling A Real Estate Business

In her early fifties, Sally Lancsek-Holt was far from being ready to retire, but she was ready for a lifestyle change. She married her former business partner Bill Holt, and they relocated from the Philadelphia area to the Outer Banks beaches of North Carolina. The only problem was that she was a top producing agent, an inner circle achiever for her franchise. How could she profit by leaving?

"The biggest problem is determining a value for goodwill," says Sally.

In Sally's case, finding a ready buyer for her business was easy. Her partner, Elaine Punchello, had worked for Sally as an assistant while still in high school until she was made a partner years later. Sally and Elaine came to terms over Sally's real estate practice - 30 percent on the total business for a period of five years. Elaine didn't have a practice separate from the clients she met through Sally, but she had the advantage that she was already well-known to them. Therefore she will pay Sally a referral fee on all sales.

But Sally isn't exactly starting over from scratch. She and Bill are reteaming, and plan to build a business with the lovely vacation homes on the Outer Banks. "A lot of former clients may be interested in buying second homes here," says Sally. Her agreement with Elaine allows her to market from her database of clients to sell them vacation properties.

If you are interested in selling your business here are a few tips:

1. Make sure your client/customer list is current. The more accurate and up-to-date the information is the more valuable it is.

2. Beef up the content on every contact. A buyer is going to want extensive information, not just the phone number. Make sure you have the names and birth dates of the clients, their children, and all relevant information on the home they bought. The more data fields you have completed in your contact management software the more valuable it is.

3. Inform your sphere that you are retiring or moving, and introduce your buyer as someone you hand-picked to take over the business. Make sure that the client understands that your replacement was chosen because their business philosophy closely matches your own.

4. Allow the clients to contact you if they wish.

5. Make sure your replacement is techno-literate because they will be using the database you create for him/her.

6. Only sell to people with a solid track record for doing business, so that you will know that your clients are being serviced the way you want them to be.

7. Decide whether you want to maintain a license and whether you would like to contribute occasionally to the business. Make sure the replacement is compatible with your new goals.

8. Get it in writing.

If you want to buy a business:

1. Find out what the selling agent is willing to let you do to help you buy the business. Can you work as his/her assistant for a time to get to know the business, and to cut down on the years or amount you'll be paying in referral fees?

2. Look for a retiring/relocating agent who keeps good records. You are paying for a database, it should be current and accurate.

3. Every circumstance is different. Find out if your selling agent plans to continue carrying a license, and what that may mean to your business.

4. While contracts vary, the norm may not be what Sally and Alisa chose to do. You may be required to pay cash up front with fewer years of referral fees.

5. Get it in writing.

Published: August 29, 2001

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.