Real estate agency valuations that test the rent roll and the sales business on their own evidence.

A real estate agency is valued on what the whole business can be expected to earn for a new owner, with the rent roll and the sales business examined separately because they carry different risks. Management income recurs while landlords stay; sales fees are won listing by listing and often follow individual agents. For shares or units, the valuer then bridges from business value to equity, adding surplus cash and deducting debt and staff entitlements, never counting trust money. Agency Valuations prepares fixed-fee written reports banded on total annual turnover: $1,495 + GST under $2 million.

When does a real estate agency need a valuation?

Most agency valuations follow a change in who owns the business or how it is owned. The purpose sets the basis of value: for a tax purpose, the ATO says market value has its ordinary meaning unless a provision defines it differently.

• ·Selling the agency business, or the shares or units in the entity that runs it
• ·Buying into an agency, or merging two offices
• ·A partner, director or unitholder leaving, where an agreement sets how their interest is valued
• ·Bringing a senior property manager or sales agent into equity
• ·Moving the agency to a related entity, a family member or a new structure, where market value matters for tax
• ·Finance secured against the business, where the lender asks for a report
• ·A dispute between owners, which needs a separate expert report
• ·Recording value at 30 June 2027, ahead of the CGT changes that start on 1 July 2027

Are you valuing the agency, its shares or its rent roll?

Three different things can change hands, and each needs a different valuation.

If the managements alone are sold and the seller keeps its entity, the subject is the rent roll. If the agency business is sold as a going business, the buyer usually takes the rent roll, the sales business, the brand, the systems and some staff, so the subject is the business as the contract defines it. If shares in a company or units in a unit trust are sold, the buyer takes the entity with every liability and its compliance history.

For shares or units, we value the business first, then bridge to equity: adding surplus cash in general accounts, and deducting borrowings, amounts still owed on past rent roll purchases, staff entitlements and tax liabilities. Trust money is never part of that bridge: in NSW, trust funds cannot be used for any purpose other than for the client they belong to.

A buyer also needs licensed people to run the business. In NSW, an agency must appoint a licensee in charge holding a Class 1 licence, and trust account withdrawals must be authorised by a licensee in charge.

Why are sales and property management valued separately?

Management income and sales fees behave differently, so blending them into one earnings figure and applying one multiple usually misstates the business.

Management income recurs while the landlord stays and the property is let, and it can be traced property by property in the trust ledger. Sales fees are earned one listing at a time, and vendor relationships often sit with the agent who won them, so a strong sales year can leave with one person.

We value the rent roll on its own income, durability and servicing cost, and the sales business on its maintainable earnings after paying every agent, including the principal, a market cost. Where sales depend on one person with no binding restraint, the sales business may add little beyond its equipment; where a team and brand win listings steadily, it can add more. Both parts are then tested against the whole business, so shared costs are counted once.

What drives the value of a real estate agency?

Each driver is tested against the agency's own records, not a summary sheet.

• ·Management income quality: fee rates, the share from recurring management fees, and current signed agreements
• ·Landlord concentration, including managements held by the principal, family or related entities
• ·Attrition: managements gained and lost each month, with reasons
• ·Sales listing flow: how many agents win listings, and how much came from one-off projects
• ·Key people and restraints: who holds landlord and vendor relationships
• ·Staff capacity: managements per property manager and tenure
• ·Trust account health: monthly reconciliations and audit reports without adverse findings
• ·Franchise or network fees, and the agreement's terms on a change of ownership
• ·The office lease: remaining term, rent against market and make-good

How are an agency's earnings normalised?

Agency accounts rarely show what a new owner would earn. A principal may draw a small or large salary, family members may be paid off-market, and the office may be rented from a related party. We restate each at market cost.

We also remove one-off items, such as a development project or an unusually large sale, and carry forward recent changes in fees, splits or retainers. The ATO lists lack of support for adjustments to a capitalisation multiple among issues it commonly sees, and recommends a cross-check method where possible. Every adjustment in our report states what changed, why and on what evidence, and the result is cross-checked by a second method.

What do we need from you?

You need nothing to enquire: the form on this site is enough for us to confirm the scope and the fixed fee in writing. After you engage us, we ask for:

• ·Profit and loss statements and balance sheets for two or three years, and year-to-date accounts
• ·A rent roll schedule, 12 to 24 months of management income, and gains and losses reports
• ·Sales fee income by agent, with each agent's split or retainer arrangement
• ·A staff list with roles, tenure, remuneration and accrued leave
• ·The office lease and any franchise or network agreement
• ·Recent trust account audit reports
• ·For shares or units: the constitution or trust deed, and any shareholders' or unitholders' agreement

What does a real estate agency valuation cost?

A whole agency, or shares or units in it, is banded on the agency's total annual turnover, excluding GST.

Under $2 million: $1,495 + GST, delivered in 2 business days. $2 million to $3 million: $2,495 + GST, 3 business days. $3 million to $10 million: $3,495 + GST, 3 business days. Above $10 million: quoted in writing before work starts, with the delivery date agreed before commencement. An expert report for a dispute or court is $4,495 + GST at any size.

Each past valuation date adds $495, and each additional entity adds $795. Delivery time starts once payment and all required information have been received. You receive an independent written report you can rely on, which follows the guidelines of APES 225 Valuation Services and is signed by a suitably qualified business valuer.