Do business brokers need a real estate license?

April 30, 2024

by an intermediary from The University of North Carolina at Chapel Hill - Kenan-Flagler Business School in Nashville, TN, USA

I know it varies by state, but it seems like a lot of states require a real estate or other license to be a broker? This is confusing to me. If you use an attorney to finalize the transaction do you really need a brokerage or real estate license to market and list a business for sale?

Not trying to qualify a broker or anything - but I haven't found a great answer to this question and now I'm going down a rabbit hole! Thanks in advance for edifying me!

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Reply by an intermediary
from Metropolitan State University in Denver, CO, USA

1. No business buyer or seller "needs" to work with a business broker or attorney, in any state, for that matter to buy or sell a business, either stock or asset. I would suggest your putting yourself at great risk of legal exposure, opposite party risk exposure, more likely to over pay, much greater risk of a deal falling through and likelihood to make an expensive and frustrating mistake during the process without both. The devil really is in the details. Unless you are an expert in business, finance, law, and the nuances to marketing and getting transactions done, you simply can't understand the significant number of variances and risks around getting a good deal done correctly with minimal risk. 2. There are different rules in each state and some federal rules and licensing rules for a person to act as a business broker, depending on the type of transaction. If you work with a broker and/or attorney. Each should have the required licenses in your respective state. See some of the previous comments for some of those details.
3. When you buy or sell real estate, one could argue if a Real Estate agent/broker is "worth" what they charge. The fact is, they do provide a valued service, the good ones are definitely worth what they charge, the less qualified aren't. Businesses are vastly more complex than real estate making it more difficult to standardize transactions like the states and real estate industry have done. As a semi-experienced buyer and seller of businesses (8 personal transactions), prior licensed tax preparer current 20 year Certified Financial Planner practitioner to business owners, and now a "biased" business broker, I am convinced 99% of sellers should work with a qualified broker/advisor and attorney and 99% of buyers should work with some form of qualified advisor and attorney in the process.

Reply by an intermediary
in New York, NY, USA

The last time I looked into this, there were about 17 states that required a Real Estate license in order to broker business deals, with or without real estate being part of it. Some states like Utah make a distinction that you must have a license only if there is real estate involved as Riggs Powell mentions above. The tri-state area does not require licensing; Midwest tends to want brokers licensed, California is a definite- in fact, our company has to have a separate version of all our documents just for California. You should know your state. If business is highly regulated like in CA, then the likelihood is strong that you'll need a license or certification of some kind.

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