Appraisal Business for Sale

[Don Clark]

I received a post card that was an advertisement for an appraisal business.

Located in the SF Bay Area, revenue of $241k in 2012, asking price is $175k.
The appraisal business includes residential, commercial, industrial, and undeveloped land.

I had heard that 1x annual gross revenues was a fair price.

I started my business with $50.00 in a checking account, a typewriter, a kitchen table and a chair. I spent the $50.00 on checks that I could write. I bought furniture as I needed it, cash. Later computers, for cash, as I needed them.

I appraised a Real estate office a few years ago. Their assets was cash in the bank, furniture discounted to 10% of it's original value, listings discounted to 60% of total value, pending sales discounted to 80% of pending closing commission value, no value for the franchise, and $5,000 for "Good Will".

Appraisal is piece work and only as good as the clinets you can retain from the seller. If it were me, I would not buy another appraisers business unless I worked there for a year and could transistion the business to myself.

 

[Pittsburgh Pete]

Keep in mind that once you make so much money, you pay higher taxes. The profit margin gets smaller when you become more successful (Law of Obama). Running a business requires you to not just look at the revenues but the costs and stress.

President Obama created the progressive tax system? Suggest you get into Wikpedia and correct their error:

The earliest known application of progressive taxation took place in Great Britain in the 14th century.[12] In the United States, the first progressive income tax was established by the Revenue Act of 1862, which was signed into law by President Abraham Lincoln and repealed the short-lived flat tax contained in the Revenue Act of 1861.

Appraisal business difficult to value but generally limited--value is in the people. Haven't been able to sell people since the 1860's!

 

[hastalavista]

That is nuts

Frank:

I see you modified your original post, so I assume you realized that I was not interested in purchasing this business, but meerely repeating the offer that I received via a postcard in the mail?

Denis

 

[Franco2]

Frank:

I see you modified your original post, so I assume you realized that I was not interested in purchasing this business, but meerely repeating the offer that I received via a postcard in the mail?

Denis

Yes sir! I miss read the original post . My bad.

 

[hastalavista]

Yes sir! I miss read the original post . My bad.

Well, if I were going to buy that business, I agree with your original observation (I would have to be nuts!).

 

[Bob Sully]

I agree in this instance, it is hard to tell what the business would be worth because of the complexity of the company and clientele. That's a lot of different types of work and who knows if the clients will remain after the transition.

I sold my appraisal company in one city when I moved away. I got back into it and started appraising in my current market a few years ago (long story). To ease the buyers worries, I "leased" him the business for 6 months so he could understand how my marketing systems worked, what type of work he would be doing and have the assurance that I wasn't lying about volume. We then applied his lease payment to the final sales price of 18 months x gross. Everyone walked away very happy... except when it came time for me to pay taxes. Again, another story.

You must bear in mind though that my business was 100% online so in effect, the other guy was really buying all the marketing that was in place along with my consultation on how to continue it. I also agreed to be reachable for a period of 1 year in which I would provide limited consultation and assistance.

 

[ockyappraiser]

I used to sell/broker radio stations. Value multiples were standard in that environment.

In appraising, the business is NOT licensed, only the appraiser. If the owner/appraiser retires, so does his book of business and contacts. HE was on those panels, not you/the buyer.

In other words, there is no "recurring book of business" that can be transferred from one appraiser to another.

If it was a fee shop with lots of trainees, those trainees are tied to the guy that retires. They would have to agree to make you their supervisor. There could possibly be some business there if the trainees had direct business they brought in.

I just don't see any value in an appraisal business being sold unless there are hard assets (land, buildings, equipment, etc) or a stable of trainees willing to accept you as their supervisor. And why would you pay to be their supervisor? if you new a supervisor was going to retire, just approach the trainees and offer to continue as their supervisor. You get the cut, and don't pay for it.