by Joe Rand

1. All My Agents Are Retiring,
What Do I Do?
Joe Rand
Better Homes and Gardens Real Estate | Rand Realty
www.joerand.com |www.facebook.com/josephrand

2. The Tsunami
NAR Member Median Age: 57
41% are 60 years or Older
25% are 65 years or Older
We’ve NEVER had anything like this before…

3. How the Real Estate “Industry” Exploded
1971-1983

5. The Birth of the Modern
Real Estate Agent
Full time.
Generates his/her own business.
Earns a six-figure income.
Maintains a personal brand.
Might have a “team”.
AND — Works for a large non-competing broker

6. “Traditional Plan”
Declining Referral Fees off a “Client List”
Three Years
40/30/20
Problems:
• Low and Indeterminate value.
• No income off secondary business.
• Sourcing disputes.

7. If it’s a “Business within a Business,”
why can’t we sell it like a business?
Real Estate Broker Assets
Brand
Past Client Database
Website address
Email/Phone Number
Online Assets (Facebook)
Real Estate Agent Assets
Brand
Past Client Database
Website address
Email/Phone Number
Online Assets (Facebook)
One Big Difference: Agent Count!

8. Valuation Model
Brokerages are often valued at Percentage of Company
Dollar: 50%-100%. Why can’t agent businesses?
Company Profile:
Bev Johnson Realty
$1,000,000 GCI
$300,000 Company Dollar (30%)
Valuation:
50% = $150,000
100% = $300,000
Agent Profile:
Bev Johnson, Real Estate Agent
$400,000 GCI
$300,000 Agent Dollar (75%)
Valuation:
50% = $150,000
100% = $300,000

9. Top Agent is Retiring!!!!
• Not going to get 100% of Agent Dollar
Percentage of agent-generated
business
• Referral
• Personal website lead
• Social media assets
• Phone/Email
Size/quality of referral database
Audience of online assets
Brand and reputation
Potential for future referrals
Revenue trends
Strategic importance
Factors Affecting
Agent Value

10. Structuring the Deal
1. Buyer Income needs to be at least 40% of seller’s.
• e.g., 40% of Bev Johnson’s $300,000 agent $ is $120,000 of Buyer Income.
2. Need to agree on the Multiple.
• e.g., high-end value of 50% of Bev’s $300,000 Agent Dollar
• 50% of $300,000 = $150,000 Purchase Price
• 3. Need to agree on an Override percentage.
• The buyer will pay the seller an Override % on all her income.
• e.g., 20% of the Buyer Agent Income.
Key: The Conversion Rate

11. Terms
Seller Agent Dollar $300,000
Buyer Agent Dollar $120,000
Purchase Price Multiple 50%
Purchase Price $150,000
Override 20%
Projections
Projected Conversion Rate 10% 20% 30% 40% 50%
Added Income to Buyer $30,000 $60,000 $90,000 $120,000 $150,000
Buyer % Growth 25.0% 50.0% 75.0% 100.0% 125.0%
Buyer Agent's Gross Income $150,000 $180,000 $210,000 $240,000 $270,000
Yearly Override $30,000 $36,000 $42,000 $48,000 $54,000
Buyer Agent's Net Income $120,000 $144,000 $168,000 $192,000 $216,000
Buyer Agent's Net Growth $- $24,000 $48,000 $72,000 $96,000
Buyer Agent's Net Growth % 0.0% 20.0% 40.0% 60.0% 80.0%
Payback Term 5.0 4.2 3.6 3.1 2.8

12. Important Points
1. “Conversion Rate” is not literal.
2. Seller’s assets should be “vetted.”
3. All this is post-broker-split.
4. Seller must refer all business.
5. Buyer must pay on everything.
6. Need a transition time for seller and buyer.
7. Need a good, firm, enforceable contract.

13. What Can You Do?
“Conversion Rate” is not literal.
Seller’s assets should be “vetted.”
All this is post-broker-split.
Seller must refer all business.
Buyer must pay on everything.
Need a transition time for seller and buyer.
Need a good, firm, enforceable contract.

14. For more information
www.joerand.com
www.facebook.com/josephrand