Common Selling Myths
Myth 1: You Need a Formal Business Appraisal
Business appraisals or “valuations” are used to establish the current market value of a business. Valuations are commonly used for selling, buying, refinancing, estate planning, developing buy-sell agreements and settling divorces. When selling, a valuation is used to determine the asking price. The problem is, most buyers need a loan to make the purchase and lenders typically order their own valuations. Lenders do this because they need to ensure valuations are done by independent third parties with no interest in the transaction. So the lesson is, don’t waste your money on a valuation lenders can’t use. If you do decide to get a valuation, make sure you use a national based valuation company and check with the buyer’s lender to confirm the valuation can be used. Also, be sure not to overpay for a valuation. Lenders typically pay between $1,500 and $2,500 for basic business valuations.