by Peter Scherman of The B&B Team
Inn broker. Consultant. Real estate agent. Is there a difference? Should you care? The answer is yes to both questions, because one day you’ll be selling the inn you may be just thinking of buying today. The function of an inn broker or a consultant is different, and each is distinct from the role of a typical real estate agent. Depending upon your circumstances and your particular need at a given time, you may need one more than the other. Sometimes you can find both inn broker and consultant in the same place, in the same person, and use him (or her) in different ways at different times. Caution should be exercised, however, when hiring any professional in whom you are going to entrust your largest investment.
Your decision about when or if you put your inn up for sale may be influenced by the price you might be able to get in the marketplace. The price you receive could have major tax ramifications that you need to be prepared for. One solution is to call your area real estate agent and ask for a CMA, or comparative market analysis, which will include pricing recommendations. This is the traditional business model for real estate. The risk is that the agent may not tell you what you need to know, but rather what he thinks you want to hear, or that the opinion offered is prepared without the benefit of the proper frame of reference. Worse still, the agent may be totally ignorant about bed & breakfast inns or what is needed to value or market them. It’s amazing how many residential agents who would never dream of trying to sell a hotel or motel will jump at the chance to list a B&B. Expertise in one area does not necessarily carry over into the other.
Another choice is to try to sell the inn yourself. In the absence of an experienced inn broker in your state or market area, this may be better than becoming tied up with an agent who is unable to provide you with the guidance you need or, worse, may make blunders that could cost you not only a sale but business, too. You still need to know what your property will likely sell for, though. And that’s where an inn broker acting in the capacity of consultant can help.
A consultant can give you an objective opinion of price (which is not the same as an appraisal). Using experience garnered in the marketplace combined with financial analysis tools as well as a knowledge of taxation issues, real property values, and methods employed specifically in valuing bed & breakfasts and inns, the consultant will have the basis for sound judgments and opinions. If you have a need for professional advice to help you make a decision about a future action, or if you need a third party to help negotiate a complex transaction, you may be able to hire a consultant to provide you with just that service for a fee.
There are many fee-for-service options. For instance, you may be wondering if you should add another room (or two) to the back of the inn; should you upgrade the rooms themselves and charge more; or should you add meal service? What is the potential impact of those changes on future value? Which improvements will be personally gratifying (and may be good for business) but may cost you money down the road? These are very real and potentially very expensive questions if not answered with the best possible advice. A consultant who is knowledgeable about the industry working on a fee-for-service basis can advise you, potentially saving you or even making you thousands of dollars by helping you make prudent decisions. The consultant is there to “guide, not decide.”
But if you are really serious about selling your inn, and you are lucky enough to live in an area that is serviced by a professional, experienced inn broker or consultant, you can get all the services you need under one roof: competent advice on pricing and presentation; exposure in the right places and in the right way (no “For Sale” sign in your front yard!); access to a database of aspiring innkeepers seeking to buy an inn like yours; the ability to sort through the tire kickers to find those who might truly be a good fit for your property; and, perhaps most importantly, the knowledge and experience to craft a workable sales agreement and negotiate the twists and turns before, during, and after the deal is struck. The premium you might pay for a specialist in selling your inn is no different than in any other field of expertise. You don’t hire a GP for brain surgery, and you don’t hire a divorce attorney to litigate a personal injury. And you shouldn’t hire just any real estate agent, no matter how nice or successful, to help you sell your inn.