Online Searching for Laundromats for Sale

PUBLISHED June 28, 2024

Many people limit their search for a Laundromat to the internet including BizBen, BizBuySell, Loopnet and multiple listing sites used by most Realtors. Online searching on these sources are limited in their responsibility to police all the information and issues that can develop into problems. Here are some examples in using web-based listings of Laundromats:

  1. There is no way to verify the person offering the Laundromat for sale is either the owner or a licensed real estate agent. It is common to find "agents" are putting the same listings on the internet, many who are not licensed to perform these services. No verification method is required to ensure the agent is licensed prior to placing a listing on most internet sites. You should check the Department of Real Estate website to ensure your agent is licensed and qualified. No license, no access to the recovery fund in case of a fraud.

  2. Few Laundromat agents on websites are members of any National association such as the Realtors or Association of Business Brokers. The ethics and standards of practice, including co-operating with other brokers and full disclosure to buyers are not always available to potential buyers. Overstating income and understating expenses are common problems without an association ethical code, so the information provided should be considered with caution.

  3. Most agents require a non-disclosure agreement. How many address, square feet, number and age of washers and dryers and other items are only offered after you sign a non-disclosure agreement. Compare this to buying a house, would you make an offer to purchase without knowing the address, number of bedrooms, the age of the house or how big a lot was included?

  4. The website agent may only know that a particular Laundromat owner might be interested in selling if an offer was brought to the owner. The agent may not have a listing on the Laundromat and a non-disclosure is used to lock your purchase to a specific agent. This explains why the agent can't tell you the years left on the lease, the water bill or the actual income and expenses. Once you sign a non-disclosure agreement and thereafter an offer, the agent takes your offer to the owner and says "sign an agreement to pay me a commission and I'll tell you who's interested in your store." The practice of listing a business for sale on the internet without a written listing agreement may be a violation of law in some States.

  5. Is a non-disclosure agreement usually requested by the seller? Probably not, since a careful reading of the non-disclosure will show that it mostly is used to protect the right of the agent to get paid a commission. Why would a seller want his agent to limit information to potential buyers? What Laundromat trade secrets are so sensitive that most information cannot be provided to a potential buyer?

  6. Does the agent represent you or the buyer? In California the buyer has the right to select their own agent, but many agents refuse to co-operate with other licensed agents on the purchase of a Laundromat. Why? They want to control the flow of information. Although you may think a dual agent is your agent, the reality is that they often only represent the Laundromat owner and their own commissions. On the bottom of many of the Income and Expense statements it states all information is coming from the seller? Shouldn't an agent representing your interests be expected to use his previous knowledge and common sense to protect your interests as a buyer?

  7. If you want to protect yourself, and get the lowest price, write in above your name on any non-disclosure agreement "This signature is only valid if the agent presenting it has a valid written listing agreement to sell this business at the time and date of this signing." If the agent refuses to accept this, then you know have a potentially sketchy agent.

  8. Refuse to purchase any Laundromat in which the agent is involved in a dual role unless concessions are made to your benefit. An attorney in a contested divorce case cannot ethically represent both husband and wife unless the obligations of the attorney is fully explained. You need to have someone on your side in a business purchase, however in a single agent sale, the agent is accepting money for a full and complete representation of all the interests of all the parties, even though the commission is from the funds of the seller, you are actually “paying” the commissions in your purchase price.

  9. In the event a selling agent refuses to co-operate with other Laundromat agents, a solution to consider is a clause in your purchase agreement stating the selling agent agrees to pay the costs of your experts and advisors up to an agreed upon amount. Suppose you want to verify outside information on a $500,000.00 Laundromat purchase from an attorney or advisor of your choosing and the cost is $800.00. The selling agent is likely receiving $30,000.00 to $50,000.00 from the proceeds of the sale and it is fair and reasonable that some costs of complete buyer representation should be paid out of the "dual agent's fees" upon closing of the sale. You can put these types of terms in your offer to purchase.

  10. Another often overlooking matter is the “income and expense information” provided reflects the cost of the current owner but you really should evaluate what your expenses will be. Right? Don’t assume you'll pay the same insurance rate, parts cost and labor costs as the current owner. Calculate the value of a Laundromat based on what your costs, including an inclusion for functions you are planning to perform, not relying on what the seller is counting as income.

Good luck in your search and if you need more aid in finding a store, please contact an experienced consultant such as Lawrence “Larry” Larsen, Andrew Cunningham or Nannette Wade in California. They will also be able to provide you with alternate methods of finding good Laundromats for sale. It's best to avoid the influencers in your search.