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Broker Calls and Says He Has a Buyer
A broker called me and said the magic words “I have a buyer”. What should I do? Do you think they really have a buyer? Do I have to pay them a fee? What should I do?
Say this: “That is great, Mr. Broker. Would you mind if we did a short one-party agreement? Not a non-exclusive agreement but just a one-party agreement? As soon as I sign it, can you please fax me their NDA and buyer profile?”
Yes. Some brokers use this as a lure to get clients so tell them you will sign a one-party agreement and nothing else. Do not sign an exclusive agreement with that broker, there is no need to do that. If they say that they need it, then run as fast as you can.
Do I have to pay the broker a commission?
Ask him if he is getting paid by the buyer? If he isn’t, then yes you should pay him a fee. The fee should probably be a reduced fee, perhaps 50-70% of the normal fee.
What are the different types of listing agreements with brokers?
- Open Listing – Anyone can sell the business and only the person who sells the business gets a commission (except for the seller).
- Exclusive Agency – Only you and one broker can sell the business. You can only hire one broker. You can still sell the business yourself without paying a commission.
- Exclusive – Regardless of who sells the business, the broker gets paid. Experienced brokers work on exclusive agreements 99% of the time. Inexperienced brokers work on the other two types, period.
Is the broker serious when he/she says “I have a buyer”?
Wait! Hold on a second…"I have a buyer too! Oh...wait, sorry I have 900 buyers!”
Ummm...He or she probably isn’t serious. Do you really think a buyer wants to buy your business without ever having met you and asked you about the business? Probably not. So it may be true that the broker has a serious interest until he has had an in-depth information on the business.