Selling Your Client List and Contacts
What Does a Salesperson Have to Sell?
- Current client database (with data fields for demographic data, such as age, annual income, years in current home, and contact information)
- Referral network
- Goodwill—your reputation in the company and the community
- Customized marketing materials
- Projects of future earnings
Many of the same factors that affect the sale of a residential brokerage company—arriving at a valuation, locating an appropriate buyer, and negotiating deal pay-out terms—also apply to selling your client list and contacts.
How One Top Producer Did It
In May 2001, Sandy Kribs, a top-producing salesperson with Windemere Jean Tate Real Estate in Eugene, Ore., sold her book of business. After 18 years, she had built up an impressive roster of loyal clients, and she didn't want to cast them adrift when she retired. "I wanted to provide the same continuity of service that doctors and attorneys give when they turn over their practice," she said. Kribs handled the transaction herself; here's how she did it:
TIP: One disadvantage of receiving all the money in one or two years is that you will probably have to pay more taxes on your profits than if you receive smaller payouts over several years.
- Choosing a buyer. Kribs handpicked a buyer from among her colleagues at Windemere Jean Tate. "I observed them for a few months to see who would be a good fit. It had to be someone successful enough to afford my business, but also someone who shared my business ethics and marketing approach. Overall compatibility was a key issue."
- Transitioning to new ownership. Kribs spent three months working with the salesperson who bought her client list. Among other things, she sent a letter to her clients announcing her retirement and introducing the person who was taking over her listings. The buyer followed up with her own letter a month or so later.
- Valuing your business. In valuing her book of business, Kribs calculated what the new owner could recoup over a two-year period, identified which clients were ready to do business, and factored in the price ranges of the homes they would buy and sell. "I was conservative in my estimates because I wanted my business to be affordable," she said.
- Structuring the deal. Kribs opted for a two-year straight buyout. She got a percentage of the sales price up front and will receive the balance in 2002. This option works well for many buyers, as they don't have to depend on the long-term success of the buyer for their money.
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