Some wild and not so wild thoughts here...
Speaking from my offline experience as a long-time participant in offline auctions, a former real estate agent and part owner in an auction/business brokerage (unsuccessful, I"m afraid), I wonder if any of this can offer a different perspective.
Business brokers - in the re and business brokering market offline - brokers typically work for the seller. Since most brokers and agents work on a commission basis - they make money by listing and selling. In the re market, a broker usually has an equity stake in the business whereas an agent is a commissioned salesperson. Brokers are always agents but agents are not always brokers even though the term is used interchangeably. That said, I'll use the term "broker" from here out but understand, I am not referring to someone who necessarily has an equity portion of the company.
Again in RE there are listing brokers and selling brokers. A listing broker earns a percentage of a sold property as does the selling broker - any broker can list and sell the same property so he does not have to split the commission with anyone. I'll deviate here to offer an example to include a breakdown in commission with two brokerages, with the listing and sale generated by agents.
Broker Able employs Agent Alice. Broker Baker employs Agent Bob. Alice and Bob are both commissioned agents for their brokerages. Alice lists a property. She markets it via several avenues available to her. Bob has a client looking for just the property Alice has listed. The client likes the property and buys it.
The commission is 10% (high for ease of demonstration). Broker Able gets 5% and Broker Baker gets 5%. Both brokers offer a 60/40 split with their agents thus Broker Able and Broker Baker - receive 3% of the sale while Agents Alice and Bob end up with 2%. Notice the commission is derived by the selling price and is paid for by the seller. Even though Bob never meets the seller - he technically works for the seller and NOT for his buyer.
In recent years "buyers brokers" have become more in vogue - these brokers do not participate in the above commission at all but are paid for entirely by the buyer to represent the buyer. This does not mean that a good broker won't try to negotiate a lower price by pointing out the commission savings - but he works for the buyer -- NOT the seller.
Why bring all this up? Obviously, in offline business brokering, this same structure often still exists. I also believe it to exist online as well. Please correct me if I'm wrong.
The other reason is, as I've mentioned before, I think there might be an opportunity to provide a kind of "multiple listing service" (MLS) for online brokers. Such MLS animals already exist but these are often an offshoot of listing services geared toward brick and mortar businesses. As such, we stand to run into similar problems as the offline RE/BB market does - they don't always understand the nature of different beasts.
Many RE brokers sell businesses. The problem is many of them treat these businesses for sale as real estate listings. They often pay close attention to the property/lease involved and mere lip service to the business itself. This is the primary reason my partner and I entered the BB arena to begin with.
Granted there are a lot more similarities between online and offline businesses than between a building that used to house a restaurant and a going restaurant but there are also many differences to consider. And I think these should be considered.
As far as the online BB brokerage industry is concerned, I have no clue whether they have similar commission-sharing schemes in place, but it might be a good idea if they did. Something to think about.
Now about auctions - while I can see certain advantages to how auctions on ebay and flippa are done - do we HAVE to follow that model? What if someone broke from that mold to offer a more "conventional" model online? Here's how it might work:
A business decides to sell at auction. Rather than listing for a live auction to end on a certain day, The business lists with the auction house and the details are gathered. Once the mandatory info is collected, an auction date is set and a listing published online and sent to participating brokers. Interested buyers register and are then given the complete prospectus. On auction day, the bidding is opened to the registered buyers and the highest bidder wins.
Now imagine the power of both concepts combined.
Andy
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