Can you value a real estate sales department?

The long and the short of it: It can be done; however, it is very rare that a value is ever attributed.

Why? Because most businesses don’t have their financial reports set up in a way that clearly defines the profitability of the sales department and the property management department separately.

In the event that this has been set up correctly — and can be demonstrated for a minimum of 4 years — then it comes down to risk analysis.

Essentially if a principal is contributing a significant portion of total GCI collected and is looking to retire, then this would be a significant risk to any buyer looking to attribute value to the sales department.

The way that a buyer would look to fund this segment of a purchase will also vary depending upon the value and the intentions of the directors.

As part of our advisory services, we work with sellers to identify these risks and implement strategies to set up their business to maximise their saleable value, so when that time does come to exit, we can extract every cent possible.

In short: Seek value, minimise risk, maximise exit.