Selling an Assisted Living Facility in Florida can be more complicated than selling a traditional house.
In many transactions, the owner is selling two valuable components: the real estate and the operating ALF business.
That means the person representing the seller should understand much more than bedrooms, bathrooms and comparable home sales.
But it also raises another important question:
How Much Should You Pay to Sell It?
Consider a common example.
Real Estate Value: $800,000
ALF Business / Operating Value: $200,000
Total Transaction: $1,000,000
Now suppose the seller signs an agreement that charges a 6% commission on the entire $1 million transaction.
That equals:
$60,000
That is a significant amount of money.
The seller should ask: What am I receiving for that $60,000?
Experience Matters — But So Does the Cost
There is real value in having an experienced real estate professional involved in an ALF transaction.
An agent or broker who understands this business can help coordinate issues involving the real estate, operating business, buyers, offers, financing, inspections, due diligence, lease issues when applicable, insurance, zoning considerations, closing coordination and other professionals involved in the transaction.
Someone unfamiliar with ALF transactions may treat the sale like a normal residential property. It is not.
But experience does not mean a seller should automatically pay 6% on the entire transaction.
What If the Same $1 Million Sale Cost $29,000 Instead of $60,000?
Using the same example:
Total transaction: $1,000,000
At 6%: $60,000
At 2.9%: $29,000
Difference: $31,000
That is $31,000 remaining with the seller instead of being paid as commission.
And What If We Sell It Ourselves?
For a direct seller who works with us, if the transaction qualifies under our agreed commission structure and we directly procure the buyer ourselves, the commission can be 2%.
On a $1,000,000 transaction:
2% = $20,000
Compare that with:
6% = $60,000
Potential difference: $40,000
Forty thousand dollars is real money. That could represent money available to the seller for another investment, retirement, debt reduction, taxes, moving expenses or the next business opportunity.
The Question Is Not “Who Charges the Most?”
The question should be: Who can successfully handle the transaction while allowing me to keep more of my money?
A higher commission does not automatically mean better representation. And a lower commission does not automatically mean poorer representation.
The seller should evaluate experience, knowledge of ALF transactions, marketing, buyer access, negotiation, communication, transaction management and commission.
We Are Not Going to Tell You We Are the Only Experts
There are other professionals who know this business.
We are not going to claim that nobody else can sell an ALF.
But we are also not newcomers to these transactions. Our experience in real estate and related industries spans more than 25 years, and our work around Assisted Living Facilities allows us to understand many of the questions that arise when ALF real estate and an operating business come together.
We also believe the fee should make sense for the seller.
Our Direct-Seller Commission Structure
When an ALF owner contacts us directly to list the property and business, our commission structure can be as low as 2.9% maximum under our direct listing structure.
And when we directly procure the buyer ourselves under the applicable listing agreement, the commission can be 2%.
Final commission terms are established in the written listing agreement and depend on the structure of the transaction.
The point is simple: Selling a specialized business does not automatically mean you should give away 6% of everything you have built.
Do the Math Before You Sign
| Commission | Cost on $1,000,000 |
|---|---|
| 6% | $60,000 |
| 2.9% | $29,000 |
| 2% | $20,000 |
At 2.9%, the difference compared with 6% is $31,000.
At 2%, the difference compared with 6% is $40,000.
Before signing a listing agreement, ask:
- What percentage am I paying?
- What amount does that equal in dollars?
- Is the percentage being charged against the real estate only or the entire transaction?
- What exactly will the broker do for that fee?
- Does the broker understand ALF transactions?
- What happens if the listing broker also finds the buyer?
An ALF Sale Is More Than Selling a House
An Assisted Living Facility transaction may involve the real estate, the operating business, furniture and equipment, a lease, employees and operations, licensing and regulatory matters, insurance and other transaction-specific issues.
That is why using someone who understands the ALF environment can be valuable.
But specialized knowledge and a reasonable commission can exist at the same time.
Before You Sell Your ALF, Know What You Actually Own
Another mistake is simply saying: “I want $1 million for my ALF.”
Break the transaction down.
How much of that value represents the real estate? How much represents the operating business? Is furniture included? Are there vehicles? Is the property owned or leased? What is the occupancy? What is the revenue? What are the operating expenses? What improvements have been made to the property?
A buyer is going to evaluate these items. The seller should understand them first.
Do Not Give Away Thousands of Dollars Without Asking Why
A commission is compensation for professional services. A good broker deserves to be paid.
But the seller also deserves to know exactly what that service is costing.
On a $1,000,000 ALF transaction, every 1% equals $10,000.
Going from 6% to 2.9% is a $31,000 difference in this example.
Going from 6% to 2% is a $40,000 difference.
The Bottom Line
When selling an Assisted Living Facility in Florida, representation matters.
You want someone who understands that the transaction may involve both real estate and an operating ALF business, not simply a house.
But you should also understand what you are paying.
If your ALF transaction is worth $1 million, a 6% commission equals $60,000.
Before giving away $60,000, ask whether the transaction can be handled professionally for substantially less.
At ALF For Sale in Miami / Carmona Real Estate Group, our goal is to help ALF owners sell intelligently while keeping more of the equity they have worked to build.
Thinking About Selling Your ALF?
Before signing another listing agreement, talk to us.
Tell us where the ALF is, how many licensed beds it has, whether you are selling the business, the real estate, or both, whether the property is owned or leased, and what price you are considering.
Your ALF. Your Equity. Know What You’re Paying to Sell It.
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