Real Estate Blog for Buyers & Sellers

SEAS5 RM - 244 - How To Price a Business For Sale &Michele has October 2023 stats!

November 30, 2023 | Posted by: Michele Cummins

SEAS5 RM - 244 - How To Price a Business For Sale & Michele has October 2023 stats!

 MLS® HPI Benchmark Price Activity
• Single Family Detached: At $1,503,300, the Benchmark price for an FVREB single-family detached home decreased 1.5 per cent compared to September 2023 and increased 4.8 per cent compared to October 2022. 
• Townhomes: At $845,300, the Benchmark price for an FVREB townhome decreased 0.4 per cent compared to September 2023 and increased 4.7 per cent compared to October 2022. 
• Apartments: At $545,400, the Benchmark price for an FVREB apartment/condo decreased 0.1 per cent compared to September 2023 and increased 3.7 per cent compared to October 2022. 

Let's connect.
✅ Personal website: https://www.michelecummins.ca
✅ Instagram: https://www.instagram.com/michelecumminsrealtor/
✅ Facebook: https://www.facebook.com/FraserValleyRealty/
✅ Twitter: https://twitter.com/CumminsRealtor
✅ TikTok: https://www.tiktok.com/@michelecumminsrealtor

Michele Cummins 
Cell: 778-885-4659
Email: mcummins@remax.net

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Curtis Pope 0:19
Well, here we are another Saturday morning. In fact, it's Remembrance Day. And it's time for the REMAX Magnolia show with Michelle Cummings and myself Curtis Pope. Good morning, Michelle.

Michele Cummins - PREC 0:28
Good morning Curtis, love seeing your Poppy. Poppy on remembering the veterans and it's all remembrance. Absolutely. And at 1111 on November 11, we may say a prayer for everyone and thank you and a

Curtis Pope 0:46
gratitude we will have a moment of silence at pretty much exactly 11 o'clock and it will follow up some some songs remember stay songs and things like that. And we have a whole a whole thing planned for just to coming up to 11am this morning.

Michele Cummins - PREC 0:58
Well I'm gonna have your this radio show your radio show on all day. So perfect, conformed to it.

Curtis Pope 1:03
Excellent what we got right now we have to concentrate on real estate because that's this job. And I know that today, at least part of the show is going to be stats because I know how excited you get about stats, knowing that she's over caffeinated. That's coming you're bouncing off the walls, like a little Tasmanian devil. It's

Michele Cummins - PREC 1:20
like all over the place. hackling Yeah, it's

Curtis Pope 1:23
gonna be an interesting show. Buckle up.

Michele Cummins - PREC 1:25
He's been trying to contain me there folks. So I before we get into the stats show, okay, and actually, maybe I'm gonna save the stats for a second segment. How about that it sounds like a plan. Perfect. And go with the flow. Oh, Curtis. So don't forget to enter into our REMAX Quest for Excellence Scholarship Program. Just want to remind everyone in case you didn't listen to that show when I announced it or kept up on my social media at the office here. REMAX Canada's is now taking submissions for the 2024 REMAX Quest for Excellence Scholarship Program, which is open until March 13. So plenty of time to enter the annual program awards a $1,000 scholarship to 40 graduating high school students in Canada presented during their commencement ceremonies. So

Curtis Pope 2:19
say excellence and so I have a child that will be graduating next year. Yes. Maybe when they when you say excellent does that mean that person or excellent school?

Michele Cummins - PREC 2:32
They can enter excellence in all those ways. I know

Curtis Pope 2:37
not listening. There's no way she's up.

Michele Cummins - PREC 2:41
I'm going to talk with her later, I'm gonna send her a text she must enter. So yes, excellence in in in in who they are. So the 2024 quest for excellence program invites all eligible students like your beautiful daughter to write and submit a 12 150 word essay based on one of the three key themes which are charitable community contribution, the vision for a brighter future. And the third would is ensuring future generations have a safe, secure and affordable place to call home. Which I quite like that one. Don't use chat GPT kids.

Curtis Pope 3:21
They're on to you to figure you out.

Michele Cummins - PREC 3:25
This should be your words. I see REMAX Magnoli. Use social media to click the link and enter. Okay, and I wanted to talk about I have my new listings will be at the end but I'm going to talk about one in the first segment here because we're going to talk about how to price a business. How to determine an asking price how to determine the value of a business. So I have listed check this out. Zillow has doughnuts. Oh my gosh, they're so yummy. I had their doughnuts for we had 17 Realtors through our MLS tour this last week and served Zelos donuts oh my gosh they're delicious and they're so unique and so different and one of a kind of love it. So anyways, I listed that business for sale. So if you're looking for a business, call me today, and it's got an downtown Abbotsford office, an office storefront you can go in and sit down enjoy the doughnuts and it's such a beautiful vibe there and then they have a secondary location in downtown Chilliwack it is the newest 1881 district. It's so cool there and they've got a great corner shop there that you can get doughnuts there too. So okay, so we price this wonderful business at 169. So 169,000. And so what are some of the ways of valuing the business? So I thought I'm going to I'm going to talk because not a lot of People No, they asked me all the time. How does how is that? So talking about how to value the business? So

Curtis Pope 5:04
there are, like, I watched a lot of Shark Tank. Now I love Shark Tank, is that almost like a valuation of the company? Like is that like, you have to look at that to like, you know, we make this much money, but we're making this much profits like Yeah, is there a whole bunch of math involved here?

Michele Cummins - PREC 5:21
Uh, not a whole bunch of math. But yes, math is definitely involved. So learning how to value it. It's, it's it's three, three different things to determine. Okay. First of all, there's always the is there goodwill? How long is the goodwill popularity, things like that, of course, the what it nets, Gross is a nets but what it nets is more important. So one common method, which is most common, of course, is the value of, of the owners discretionary earnings. So it's, it's s d e, so figuring out what that is, first. And so how you do that is you calculate the value of your business manually at first. So there's three steps to do that. And, and we're going to first talk about the first most important step which is calculating what that sellers discretionary earnings are. So what is the SDE, because many owners of businesses have a lot of different tax write offs and credits that they they they have that do not go with the new buyer, the new buyer will have their own style and write offs. So most experts agree that that is the starting point. Before non cash expenses, you've got to evaluate that and determine that so like your salary, so the owner salary, or total of all the owner salaries, how much do they take for themselves and maybe different than what you as a new buyer owner would take any perks you or others receive, like personal travel, personal vehicle payments, things like that, the family members on payroll holding non essential positions that won't stay there with with the new owner, non cash expenses, such as depreciation, and amortization, leisure activities, such as business golf outings, or lunches out with potential customers, or charitable donations, business travel, that's not essential to running the business. So these are, these are some things as well, one time expenses that obviously wouldn't be moving forward. So, so once you calculate that out of everything, second one is to find out your Ste multiplier. So some of the factors that make finding that right, multiple difference are difficult, they are the industry. So you have to look at what industry it is, then the geographic trends, so the market risk, and then you have the company size, the business is tangible and intangible assets, independence from the owner, so the owner risk, and then there's many other variables as well, that we won't get into. But the third way of calculating is subtract business liabilities. So you need to have Well typically a buyer wants to see up to three years of financials. So has the business been in business longer than three years? What does that look like? If they haven't? How popular is it? And is there risk to the to the buyer? Are they going to make what they made last year Are they are they are the profits going to move up. So there's these three ways of it. So again, you have to first figure out and calculate the sellers discretionary earnings, and then you're going to find out what the STE multiplier is. And then the third one is you're going to add your business assets and subtract those business liabilities. So once you have that, then typically it is depending on lots of variables, like how long the business been going, how much they make, and the goodwill and any other risks is you multiply that annual net profit by one to four times Okay, so whatever that net profit is, do you multiply it twice three times four times once and that then there's other variables but that's the basics of it. If the business has a lot of assets let's say they have more assets than than even their net income that could be as well so you have to look at it all but those are your three main ways and really it's that it's what is the business make times up to four

Curtis Pope 9:50
Okay, cool. So you can go by the place and have Richard work there it can you company for him? You know, I could buy in I'd you know, I'd give you a you know 25,000 For you know 10 1% and a royalty 75 cents a donut in perpetuity it's a wonderful royalty.

Michele Cummins - PREC 10:12
That's right. So you may be picking up the donut business soon here and

Curtis Pope 10:18
it wasn't for Richard. Yeah.

Michele Cummins - PREC 10:21
So yeah, that's there's so many ways of of running your business and of course having your accountant and a really good bookkeeper is of the utmost importance and how you how you structure the business. If you're buying a business Oh, is it land as well or or a building with the business? And is it in you know, all these things? So, but yeah, there's, there's a few great opportunities out there right now. And the best opportunity is Zillow is donut. So if you're looking for a business, like a donut, Tony

Curtis Pope 10:57
business, great job for Richard. Oh my gosh, I'll keep them busy. Now the trouble okay,

Michele Cummins - PREC 11:00
I would love that. Because one of my favorite foods, one of my favorite things are donuts. I was just talking to him the other day. I'm like, Oh, my goodness. I'm

Curtis Pope 11:11
not a big sweets kind of guy. But I do love donuts.

Michele Cummins - PREC 11:14
I when I grew up Catholic in the Catholic Church, we would have doughnuts every Sunday, and oh my goodness. I couldn't wait for those doughnuts but my dad said to only Michelle two. I think I think he let me allowed me up to like four cents. I'd hate to say it. I feel like I ate because all I wanted was doughnuts. Anyways, doughnuts

Curtis Pope 11:32
are so good. All right, we should probably take a break now perhaps have a doughnut. If people want more information about your listings, things like that. Where can they go? REMAX Magnolia realty.com We're back with more right after this.

And we're back with segment two of the REMAX Magnolia real estate show with Michelle Cummins and myself Curtis Pope. Now you got me thinking donuts.

Michele Cummins - PREC 12:37
I know. Thanks for Oh good. Oh, that's about

Curtis Pope 12:40
donuts. We have important stuff to do here because I know it's a stat show.

Michele Cummins - PREC 12:44
Yes, it is. We've got Fraser Valley real estate statistics and the market has weakened as sales and prices continued to edge downward. So property sales and new listings in the Fraser Valley it fell again in October as consumers continue to put home buying and selling decisions on hold on the face of elevated interest rates. The Fraser Valley Real Estate Board recorded 970 transactions on the MLS. It's a drop of 12% from the previous month and fourth consecutive decrease since the 12 month high that we had of 19 135 sales. So that's a big difference. At new the new listings they fell decreasing by 11% from September and by 28%. Since peaking in May. What we're seeing in the Fraser Valley and indeed across the province is the impact of sustained high interest rates on the overall market. And that's from an orange of beans so Chair of the Fraser Valley Real Estate Board. He says this has been the case since the latter half of the year so far and we anticipate the trend will continue until we start to see some downward movement in the policy rate active listings. They were less than 1% over the last month and up by 17%. Over October of last year. The sales to active listings ratio was 15%, creating balanced conditions in the overall market. With detached housing dropping into the buyers market territory at 12%. The market is considered balanced with ratios between 12% and 20%. single family detached prices for the benchmark prices overall right now in the Fraser Valley are at 1,503,000 and that is a 1.5% decrease compared to September and an increase of 4.8% from last year. So still an increase from last year. Townhouses at 845,000 benchmark price and that's a decrease of point 4% compared to the month before an increase of 4.7% from last year. and apartments are at 545,400. And that is a decrease of point 1% from last month and an increase of 3.7% Compared to last year. And the interesting thing is typically in October in September and October the market has an uptick and then it starts going down again in the winter months starting November but this fall it's it's come down a little bit full September. Well, it started in August and September and October. So let's go municipality by municipality, starting with Abbotsford detached benchmark prices at 1,179,000. And that is 6%. Higher than last year. But down point 9%. from the month before townhouses at 649,600. That's down from last year point 6%. And down from month before point 8%. Apartments at 436,600. That's up last from last year 1.6%. Down from the month before by 1.9% missions detached benchmark prices at 1,004,700. And that's up from last year of 2.9%. But down from the month before 4.4% townhouses at $664,600 That's up 2.1% from last year and down 1.3% from the month before and apartments at 452,800 Down 1% from last year and down 1.1% from the month before which is interesting because as the interest rates go up and the market gets harder buyers who have to buy are pushed into more of a smaller price lower price points such as townhouses or and apartments from detached properties. But in Michigan, they had gone down there. So let's check out why it rock Always Sunny in White Rock, South Surrey area so detached properties benchmark at 1,946,700. That's up 3%. From last year down 2.1%. from the month before. Townhouses 971,600 That's up 5.4% from last year, and it's down 2.3%. from the month before apartments at 642,700. That's up a whopping 10.4% from last year and it's up 2.2% from the month before Langley benchmark prices for detached at $1,632,000. That's up 6.5% from last year. But down point 3% from the month before townhouses at 869,600 That's up 2.7% from last year, up 1% from last month. Apartments 609,500 That's up 3.7% from last year and it's actually up 8.5% from the previous month. And delta at 1,374,000. That $600 For detached up 8% from last year down 1.2% from last month and townhouses 958,600 That's up 12% from last year and it's up 1.1% from last month and apartments at 570,200 Up 2.1% from last year, but down 1.4% from last month. And then city the rest of the city of Surrey just all of Surrey. Okay, so we have detached prices at 1,646,400. Up 4.2%. From last year down 1.5%. From last month. Townhouses 876,300 That's up 6.2% from last year, down point 8% from last month and apartments $535,100. That's up 2% from last year and down point 8% from last month. So there you have it. That is the October 2023 Fraser Valley real estate statistics. Overall we are in a balanced market. If you see on our YouTube I'm holding up you can't listeners can't see this. But it's showing a balanced market in the blue on the graph, log on to our website to have a look at that today. If you want to look at the stats, if you want them monthly, I'm happy to email them to you. And it makes sure you keep up on the market. If you want a neighborhood market watch. I call it My Neighborhood Market Watch. I'll throw a lasso on my computer around your property. And I'll capture every active listing every listing that terminates cancels expireds sold solds will automatically be emailed to your email and I just need your email and your name and of course your address so I can throw that lasso around it and you can keep up on your neighborhood market and it lasts for one year and it's automatic. As soon as the real estate board makes an update on a listing you will automatically be alerted and you will automatically see it as soon as they hit enter. Boom, you see how much it's sold sells for. So if you want to get on that Neighborhood Market Watch, let me know. No problem. Okay, so let's talk new listings.

Curtis Pope 19:59
Have you listings?

Michele Cummins - PREC 20:00
I do? I do. I do. I've got one at 33112 Pinchbeck Avenue and mission and this one is having an open house today and tomorrow if you find time and if you're looking for a house you better find the time to go look at this gym. It is brand new, and it's seven bedrooms, four bathrooms. Yes, folks. It has a suite. This is an opportunity. Talk about affordable. This was built in 2010. It's backing onto a park. It's got a long driveway for lots of parking. It's got a double garage. It is the place you want. It's almost 5000 square foot lot. It's almost 3200 square foot house. And it's on the market for 1,000,900. Sorry, 1,198,099. That's the price. Okay, so that one I have Nina Nina is going to host the open house today and tomorrow from two to four. And then I have off 32263 McRae Avenue again in Michigan, this is a gym. This is a flip. This is great for first time homebuyers. It's great for investors. It's a really good size lots almost at 300 square foot lot. It's flat, it's usable. Check out this price. 729,000. Wow. Yeah, I

Curtis Pope 21:21
don't hear that anymore.

Michele Cummins - PREC 21:23
I know. Yeah, this one is a good one. I literally what can you buy for that price? That's a detached house almost at 300 square feet for the lot. The house is a three bedroom, three bathroom. So it's sufficient. It's almost 2000 square feet. It's a good size. It was built in 1978. And yes, it needs a lot of work. That's why I call it a great flip. If you're not worried about you know, getting some, you know, elbow grease in there and doing the work. It's beautiful, huge, beautiful maple trees. It's gorgeous. Anyways, the property is gorgeous. It is available to walk through at your leisure today and tomorrow from two to four. And my colleague, realtor agent in our office Shanaya will be hosting that one. So she'll be there to show you that that opportunity. And then Eagle crescent, this gorgeous place on Eagle crescent, James is gonna do an open house today from two to four. And then Kelly is going to do one tomorrow from two to four so that that one's open both days from two to four as well. So that is the farmhouse style, beauty that's just been fully renovated by none other than Pacific peak construction, they are so good at what they do. It's got a double deck, gorgeous views backing onto green space. It's very nice. You can sweet born put a one bedroom in there if you want to. Oh, and by the way, the government has this great incentive to offer up to $40,000 if you put a suite in your home to add more living space for everyone in life guys great opportunity. Almost $40,000 So if you have a home and you're thinking Hey, should I put a Sweden or not? Yes. Just put the Sweden and then get get this get the help from the government. And there you go. So that one off Eagle Crescent is that 8083 Eagle Crest and that's mission two and that will price is 1,125,000 brand new metal black roof. It's beautiful above white painted house and yeah, just go see it to believe it folks,

Curtis Pope 23:29
and go today and give James a hard time.

Michele Cummins - PREC 23:31
Yes. Do so make it difficult.

Curtis Pope 23:34
I don't know why pick on James because it's fun. Yeah, it's true. It's fun. And he only gets picked on the off.

Michele Cummins - PREC 23:41
And he loves it. He's okay with it. Yeah, he's, he's good about it. He's got good personality. Okay, so I have a quote this week from Elon Musk. All

Curtis Pope 23:51
right. Feeling good about naming his kids because that's my favorite pronounces kids names.

Michele Cummins - PREC 23:56
You know, failure is essentially irrelevant, unless it is catastrophic. Take that. Well,

Curtis Pope 24:07
there's something to say about what he's done to X. He's taken a $44 company and what made it into a $19 billion company.

Michele Cummins - PREC 24:15
It was all meant to be it was all purposeful if that was his business plan from the beginning. Well,

Curtis Pope 24:22
I don't quite follow the plan, but hey, he's on plan. He's on track. Alright, if people want more information about about your listings about what you do as a realtor, where can they go? REMAX

Michele Cummins - PREC 24:31
Magnolia realty.com And make sure you join us again next Saturday

Curtis Pope 24:35
when we will have Nina and Shanaya here, mortgage broker and realtors on the show to talk more real estate. And join us again next week when we will talk real estate in order to unlock your real estate potential on the show real estate is maximized. Thanks for listening

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