Do You Really Need a Real Estate Salesperson? Do You Really Need to Ask?
If you are considering selling your dental practice, naturally you might be thinking: “Do I really need to pay 10% commissions to a real estate salesperson?” “What is the value that they bring?” “And how does that equate to 10% of the purchase price?” Well, I think it’s worthwhile to tackle some of the arguments that they might raise to justify their 10% commissions. It’s also worth mentioning that there is a natural (in my biased opinion) alternative to using them as well: use DMC LLP from start to finish to prepare, market and sell your practice. Now, let’s get into those arguments, shall we?
Can Real Estate Salespeople Get You the Most Exposure?
This is subjective. Granted, some real estate salepeople do a lot of marketing and know a lot of prospective purchasers.
But guess what? So do we! In fact, we may have MORE exposure to prospective buyers because: (1) we do a lot of traditional marketing (e.g. direct mail, eBlasts, etc.), (2) we have a large online presence on our websites (www.DentistLawyers.ca, www.DentalPlace.ca, and www.DentistLegalForms.com), (3) we work for and talk to dentists all the time (not just those looking to purchase a dental practice at this precise moment), (4) we conduct open houses at dental practices which encourages multiple offers (and hopefully a higher sale price), (5) we have a large network of professionals serving dentists, and (6) we talk to foreign trained dentists and entrepreneurial dentists who are also looking to buy a practice. Bottom line: we deal with dentists at ALL stages of their careers and have access to many prospective purchasers.
Do Real Estate Salespeople Get You the Highest Price?
It’s currently a seller’s market. There’s no denying that. So can we say that the efforts of one person result in you getting paid the highest? Maybe… but we’re missing the context. If that one person markets your practice, conducts an open house, and puts an offer together, then their efforts CAN contribute to you receiving the highest price for the practice. But how hard is it to do those things if you are not a real estate salesperson? Well, you can either try to do it yourself (not recommended). Or you can use the ONLY other person who is legally allowed to market your practice for sale and actually sell it: DMC LLP. That’s right: accountants and consultants aren’t legally allowed to market your practice for sale. And given that we take on the role of a traditional real estate salesperson, we employ the same methods to try to get you the highest price possible.
But here’s where we really shine: we can help you maximize the sale price by NOT LOSING MONEY on things like: not having staff on contract, having a bad lease, or failing to incorporate to take advantage of the lifetime capital gains exemption. All of these things have cost dentists hundreds of thousands of dollars when the purchase price is being negotiated. And only DMC LLP (not real estate salespeople, accountants or consultants) can rectify these things for you before you sell. When it comes to making sure you’re legally prepared to sell, talk to us first!
Do Real Estate Salespeople Represent Your Best Interests?
Real estate salespeople have various legal, ethical, and professional obligations to represent your interests. But there’s an inherent conflict when someone represents you and gets paid a commission after the deal closes. Think of it like this: real estate salespeople get paid 10% commissions only when the deal closes. They invest money in advertising, etc. But they want the deal to close fast so they can recoup their initial investment. This can create a conflict of interest because the selling dentist may be pressured into accepting less than what they deserve (or worse terms) just to close the deal.
So what about dental practices that WE advertise for sale? Well, since we are charging fixed fees in advance for work only when that work is completed, we don’t have any conflicts. We get paid when the next milestone is reached (i.e. when a particular service is performed). So there is no conflict in that sense. By the way: lawyers have a duty of zealous partisanship to their clients. This means we must only represent ONE SIDE of a transaction to the best of our ability, honestly and in good faith. Anyone who claims that we have a conflict of interest by representing a seller is incorrect: we don’t represent purchasers, we don’t prepare the appraisal, and our pay is not contingent on the sale price.
What About the Appraisal?
Real estate salespeople in the dental industry typically prepare an appraisal. But there’s another potential conflict of interest here: how can someone prepare an appraisal for a practice that they are going to earn 10% commissions on? How can they objectively / unbiasedly appraise a practice in this manner? We have access to INDEPENDENT APPRAISERS with MBAs and finance background who don’t ask to earn 10% commissions by selling your practice; instead, they give a thorough and independent appraisal based on the fundamentals of your practice. And they charge roughly the same as a real estate salesperson for preparing / updating an appraisal.
Does Having a Real Estate Salesperson Save You Money?
According to some, having a real estate salesperson can get you the most money so you can afford to pay your lawyers, accountants, and their 10% commission and still end up with lots of money in your bank account. But that’s a little bit of a tough pill to swallow, don’t you think? What if you still had to pay for lawyers and accountants but you ended up not paying the 10% commission? You’d be saving a lot. But how much would you be saving? Well, DMC LLP charges fixed fees for almost everything and we give quotes in advance based on the specific elements of your deal; so we don’t actually know how much we’d charge you without reviewing your specific situation. But we can estimate that we would save you anywhere from 25 – 50 % of what you’d normally be paying if you paid 10% commissions plus 13% HST plus legal fees plus HST and disbursements. That’s a huge savings! You could use that to upgrade your house, buy a new car, go on vacation, or stuff money underneath your mattress!
Bottom line: before you go the traditional route of selling your practice using a real estate salesperson, try out DMC LLP. We have lots of testimonials from happy clients who have used us, we understand the nuances of selling a dental practice, we have access to purchasers, and we will do our best to help you make the most and save the most!