Should I Use An Unlicensed Business Broker to Sell My Michigan Business?

In the interest of full disclosure, I have to tell you right up front that myself and all the agents working at my brokerage are licensed by the State of Michigan to sell real estate and we work under a broker/owner, who closely supervises all transactions and business going through in the office.

Currently, Michigan does not require a license to sell a business. This information can change at any moment.  Every state requires a real estate license for the sale of real property and further, a license is required for transfer of any interest in real estate which specifically includes a lease assignment or a new lease.

According to one source, “Michigan recently required a real estate license, but a court case nullified it and the legislature might feel that they should act and require licensing for the sale of a business.” When selling a business, typically there is either a lease or real estate to be transferred or assigned or negotiated. Who do you want handling this important transaction?

There are many ways of doing business and there are various brokerage models in today’s environment. The only thing that should matter to you the seller, when you’re selling your business is “what the best thing for me?” This blog starts with a question and ends with more questions that you will have to answer for yourself. My opinion should be obvious, but in case you can’t tell, I believe that working with a licensed brokerage is in the best interest of everyone involved with the transaction, be it seller or buyer. Below are some questions for you to consider in order to help you make a good decision, along with some of the advantages of working with a licensed professional.

Can I check to see if there are any complaints for the individual or the company?

Most states have a Department of Real Estate website where you can verify license information.

Click here to check the license information for any real estate company or agent in The State of Michigan:

https://www2.dleg.state.mi.us/colaLicVerify/lName.jsp

If a business broker is not licensed with the state there’s no way to check.

Can I check to see any educational courses taken by the individual?

All states require certain hours of educational courses and passing of a test to get a real estate license. On-going Continuing Education courses are required to keep a license active and this information is usually available on the state website.

Click here to check on continuing education courses completed by an individual in Michigan:

https://www2.dleg.state.mi.us/colaLicVerify/lName.jsp

If a business broker is not licensed with the state, obviously they are not required to take yearly Continuing Education courses.

Does the company have a local office?

There are national and internet based business brokers out there. A virtual broker may be in your future. Local brokers have the best knowledge of the local market, period. Often the closing will take place in the brokers’ office too. A licensed broker is required to comply with state law with regard to handling deposits and conducting an actual closing.

Bottom Line: Using the services of the wrong type of broker carelessly can hurt your business and its value.

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