05 Jan Cut the Time Between Listing and Closing
We recently reviewed a survey we had done for the International Business Broker’s Association by Babson College 20 years ago. One of the questions asked for the average number of days from listing to sale. We compared the results of the 1992 survey to our most recent survey results from 2011.
|Survey Year||>Average time from listing to sale|
The big question is, obviously, “Why do deals now take more than twice as long from listing to closing?” One would think with all of the resources available today plus the use of email, search engines, computers, etc. that the time it takes to close a deal would be much less than it was almost 20 years ago.
Paperwork can be emailed back and forth. Information for vendors, government offices, and the like are readily available with search engines. Don’t forget cell phones, fax machines, etc. One would think that with all of these tools available that deals would be much easier to close and the time from listing to close would be much quicker.
So, why does it take twice as long today than it did 20 years ago (almost)? We can point a finger at increased governmental paperwork, red tape, etc. We can also assume that the attorneys of today work at about the same speed as they did 20 years ago. However, one would think that with all of the tools available today that their speed in drafting documents would be greatly increased. I suspect that the piles of paperwork sitting on their desks today is just about the same as 20 years ago.
The key thing to keep in mind is that the longer it takes to close the sale, the more likely it is that it never will sell.
What can business brokers do to cut down on the time between listing and closing?
Here are a few ideas:
- Go to market quicker. We used to place a new listing on the available list, but with a sign that signified that not all of the back-up work was completed. That way if someone had a buyer for a like business, it could be shown, but with reservations.
- Sell the listing to all of the agents in the office.
- Co-broker to create more buyer activity.
- Do all of the pre-closing work (landlord approval, list of FF&E, rundown on existing loans, all of the seller information, etc.) prior to an offer.
- Take shorter listings to put more pressure on the listing agent and the office to get a deal. No one works on a listing that has been sitting around on the premise that since it hasn’t sold, it probably isn’t saleable.
- Contact the seller every 10 days (max) to keep them involved in the selling process. Work on getting a lower price and especially a lower down payment. Keep up with how the business is doing; are sales increasing? etc.
- Change the write-up on the various listing sites you are using at least once a month.
- Keep in mind that the sale starts with a potential buyer actually seeing the business. Remember, the sale starts when the buyer sees it.
- Line up a closing attorney, an escrow company, etc. — whoever is needed to close deals — who can get the job done quickly and efficiently. Then encourage your buyers and sellers to use them.