Selling a Real Estate Finance Business

Most real estate finance firms trade on a multiple of normalized earnings, but buyers usually discount peak-cycle margins. They separate one-time or volatile gain-on-sale from income that holds up better, such as servicing fees, contract platform fees, or recurring broker program revenue, then adjust for warehouse constraints, compliance cost, and repurchase or EPD exposure. To sanity-check pricing against real-world ranges, use Rejigg’s free valuation calculator and run downside cases that reflect rate and volume swings.

Most buyers normalize gain-on-sale using multi-period averages and then stress-test pull-through, fallout, and hedge results. Wider-than-peer margins often get a haircut unless you can show stable execution, a disciplined renegotiation policy, and consistent investor pricing. Concentration matters, too. If one outlet, one branch, or frequent exception pricing drives the result, buyers typically price that as fragile. The cleanest defense is a simple bridge from locks to fundings to margin, plus what happens to extensions and fallout when rates move.

Sometimes. An SBA loan can work for smaller, fee-based brokerage models, lead-gen businesses, or other structures that do not depend on warehouse funding and complex investor approvals. It is often harder for correspondent or warehouse-dependent lenders because lenders will scrutinize licensing, regulatory exposure, revenue recognition, and existing debt or covenants. If a buyer is SBA-backed, expect lender-ready financials and a straightforward entity and asset story. You can model payments and leverage with Rejigg’s SBA loan calculator.

No. In mortgage and lending deals, serious buyers usually care more about licensing continuity, warehouse terms, investor approvals, and repurchase history than a polished narrative. If you can run a tight process and produce a clean diligence package, you can often sell without paying a success fee. Rejigg provides pre-vetted buyers, digital NDAs, a built-in data room, direct messaging, and offer comparison, free to sellers (buyers pay). Start with the preparation guide.

It depends on what has to carry over on day one, including state licenses, NMLS records, investor approvals, vendor contracts, and warehouse facilities. Stock deals can preserve approvals and continuity, but buyers often prefer asset deals to reduce exposure to legacy repurchase tails, complaints, and exam history. Many transactions end up a hybrid, where key permissions stay in an entity while other assets move. The practical first step is mapping which licenses and approvals sit in which entity before negotiating terms. See negotiate a deal.

A well-run process is often 3–6 months, and approvals can extend it. Change-of-control filings, NMLS updates, investor re-approvals, and warehouse re-underwriting add third parties to the critical path, so LOI-to-close is often longer than in non-regulated services. Timelines vary by state and by your counterparty set. The quickest closes usually happen when the seller can share licenses, approvals, funding docs, QC history, and claim logs on day one in a secure data room.

In mortgage businesses, working capital is mainly the cash buffer needed to ride timing gaps between funding and investor purchase advice, while still paying commissions, lead bills, vendors, and warehouse interest. Buyers negotiate a target so they do not have to inject cash immediately after closing. The exact definition varies by business model and whether escrows or trust accounts are involved. If you do not define it early, it often becomes a late price adjustment. A documented cash-cycle walkthrough reduces surprises during due diligence and closing.

MSRs usually require specific transfer steps and often need consents, depending on who owns them, who subservices, and what agency or investor rules apply. Buyers will dig into delinquency and advance behavior, subservicer performance, recapture assumptions, and any restrictions on transfer or collateralization. If the MSR position is small, hard to reconcile, or tied to messy reporting, some sellers sell it before the transaction or carve it out. The main point is to define early what MSRs are included and which obligations follow them.

Yes. Because mortgage volume, pull-through, and secondary margins can move quickly, earnouts are often used to bridge valuation gaps. Common metrics include funded volume, revenue, or profitability, and some buyers add quality gates like defect rates, EPDs, or repurchase losses. Definitions matter a lot. You will want clarity on channels and products included, accounting treatment, hedge impact, and what happens if the buyer changes pricing or overlays. Rejigg’s offer comparison dashboard helps you weigh earnout risk against a higher cash-at-close offer.

They are common, but enforceability varies by state and by worker classification, especially for loan originators who may be contractors. Buyers usually want protection against the seller recruiting producers, re-opening in the same markets, and soliciting referral partners or staff. Scope and duration should match the footprint of the business and your post-close role. In practice, non-solicits for LOs, processors, and top referral partners often matter as much as the non-compete itself because relationships drive pipeline.

Seller financing means you carry a note for part of the purchase price. It shows up more in smaller broker or fee-based shops, and it can also appear in lender deals when approvals or funding changes add timing and execution risk. Warehouse-dependent models may need more structure because covenants and liquidity requirements can limit flexibility. If you carry paper, confirm it does not trip warehouse or investor covenants, and negotiate clear default remedies, security, and any personal guarantees. Rejigg compares offers side-by-side so seller notes do not get lost behind headline price.

Buyers focus on what runs the operation day to day, such as the LOS, pricing engine, CRM, doc management, call recording, and how data moves between them. They will review contracts, admin access, and whether a vendor can terminate or reprice on a change of control. If you have MLS, credit, or other data agreements, expect close review of usage limits, audit rights, and sublicensing restrictions. Incident history matters because a data event can trigger investor scrutiny or regulatory attention. Keep contracts, SOC reports, if available, and admin runbooks in a secure data room.

Tax outcomes depend on structure and facts, including asset versus stock, allocation across goodwill and other assets, entity type, and whether MSRs or retained portfolios are part of the deal. Asset sales can create ordinary income components in places sellers do not expect, while stock sales can lean toward capital gains treatment, but it varies. State taxes can also matter if you operate in multiple jurisdictions. Bring in a tax advisor early and model after-tax proceeds alongside headline price so you can compare offers on what you actually keep.

Early diligence in real estate finance usually starts with licenses and NMLS details, control-person information, warehouse agreements and reporting, investor approval lists and key contracts, and compliance materials such as exam reports, audits, QC summaries, and complaint logs. Buyers also ask for repurchase and EPD history, production reports covering locks, fallout, and fundings, plus major vendor contracts like LOS, credit, flood, title, and doc prep. Rejigg’s built-in data room is set up for these asks so you can stage access after NDAs and keep momentum.

Assume producers, investors, and warehouse partners will react quickly to rumors, so keep disclosure tight and staged. Use pre-vetting and signed NDAs before sharing anything that identifies counterparties, top LOs, or facility terms. Start with aggregated metrics, then share names and contracts later when intent is real. Avoid sending diligence by email because it is easy to forward. Rejigg supports pre-vetted buyers, digital NDAs, and permissioned sharing so you decide exactly who sees warehouse docs, investor agreements, and compliance materials.

Many deals use 30–90 days of hands-on transition followed by lighter support, but mortgage and lending firms sometimes need longer coverage. Licensing approvals, investor confidence, warehouse re-papering, and repurchase tail management can keep the seller involved beyond a standard handoff. Most buyers want the seller for key introductions, escalation paths on claims or audits, and help retaining top producers. Spell out the role in writing, including what you will do and what you will not do. See transitioning after the sale.

It depends on what buyers will see when they stress-test your model. Purchase-heavy pipelines, diversified referral sources, stable investor execution, and tight QC can sell well even in a down cycle because buyers can underwrite survival. Peak refi-driven earnings tend to get discounted unless you can show how you replace that volume and protect margins. Waiting can help if you use the time to reduce concentration, document approvals and funding continuity, and clean up claim history and reporting. Rejigg lets you test valuation scenarios and talk to vetted buyers without committing to a full process.

Late breakups usually trace to day-one operability issues that were not surfaced early. Common culprits include a warehouse line that needs a new guarantor, investor approvals that require consent, licensing timelines that pause originations, or undisclosed repurchase, complaint, or exam history that spooks counterparties. Most of the time, these are solvable if you bring proof early and let the buyer build structure and timing around the real constraints. Rejigg’s guided process and staged data room access help surface these items before months are lost.