Selling/Buying an Appraisal Business-Price?

[bpi304]

If you were to sell your business or consider buying an appraisal business what methodology would you use to figuring out price?

 

[Scott Lanz]

Depreciated equipment value and software value.

That sounds rough, but small service oriented businesses have a tough time selling for more. They are just to easy to start-up and very person specific.

I have heard of some rare cases where larger operations have been purchased by using a multiplier method on the gross/or net income.

On my books, my business is worth whatever my receivables are, less contracted expenses and taxes plus retained earnings.

 

[Wayne Tomlinson]

Several years ago, an older friend and mentor decided to retire.

He lived in another town 30 miles away. He wanted to sell his business. At a time later, he said that he had sold it and agreed to a non-compete contractl

Strange, no one ever surfaced that indicated in any way that the business had really gone to anybody. Never.

I think that he really did not want to admit that there was not any thing to sell other than what was in his head.


He had the greatest reputation in his town, he was a university professor, when he said what the value was, there was no questions asked. But I believe he still really did not have any thing that could be sold.

I believe that unless you have a large business, with a large staff, and good reputation, that there is little of value left when you retire.

I just remembered!

I did purchase all the stuff from an old retired appraiser. The stuff filled the back seat and trunk of my car. I paid $100.00. When I got home and went through the stuff, most of was so old and out of date that I disposed of most of it. Even his HP-12C would not calculate correctly.

Wayne Tomlinson

 

[Lawrence R.]

I'll Give you 200 dollars to take mine!!

Headaches included.

 

[Restrain]

Realistically, if you can get one year's income for the whole company, you're doing good. Due to annual fees for software maintenance, etc, the actual software/hardware is worth virtually nothing. Also, any appraiser will recognize that clients come and go, so you can't count on a steady income stream like you can on an office building.

I saw one company sell for $1M back in the early 80's, before the Texas collapse. Appraiser ran the company into the ground within 1 year. The selling appraiser had carried the note, and had to foreclose to get his name back (included it in the transfer), but he had lost all the clients. Company was worthless.

 

[Tim Schneider]

I am doing a fee split for the first 400 reports. It is working out great for both me ad the seller (parent).

 

[Karl]

Luckiest man in the world is in Casa Grande AZ sold his Appraisal Business for $400,000 150,000 down the rest in payments. Seller is to stay until Sept 2008 SOLD!!!! September 2006, The buyer is still unlicensed, & The seller who is certified has to stay until Sept 08 All but 1 other appraiser have left some left within 3 months of transfer, new owner was a "Burned out" Stock Broker, think "Burned Out" was a code word for something more severe. This 400,000 did NOT include the Building!!!!! Last report the seller is still getting the payments, but seems he isn't at the office very much believe from latest reports of the 12 Appraisers, lets see; Have the x owner certified with over 20 years, another certified with 5 years experience and 1 or 2 licensed in past year. hhhhmmm!!!! So who is going with the trainees & who is signing those reports.

 

[Tom Eichholz]

I would suppose the only value in most Residential Appraisal files to a potential buyer would be the sketches. They might save a little time remeasuring---if you trusted them to be correct.

Clients come & go...markets change, so no value there.

So what are the sketches worth? Well, if it's 10 degrees and there's a blizzard going on and you are looking at a 5,000+ sq ft house to measure, I'd say priceless.

However, when the Subject is a 24x40' Cracker Box on a nice spring day, I'd say it's worth just about nothing.

Add it all up and they're probably not worth very much. "So Mr. & Mrs. Appraisal Company Buyer, get all those D@MN files out of here! Please, just take 'em!"

 

[bryanknowlton]

I tried selling my biz last year at 50-75% of the previous years income. I moved to AZ and was deciding to sell or manage. Well, only 1 offer came in. If it came in fast, with cash, they might of got it, but instead the offer was hesitant and I decided to hold out and manage. Glad I did, cuz AZ was too friggin hot and I had to move back to CA.

Just like the market, it is all in the buyers hands at this point. Good luck getting anything for an appraisal biz right now.

 

[KYLECODY]

Lenders/clients generally order based on the individual personnel, not on the name of the Company. Once the individual people they know are gone they generally have no loyalty. Really just worth your equipment/depreciated=nada. Good luck.