Spend enough time looking through real estate listings and eventually you’ll come across something that seems like it wandered into the wrong category.

• A sushi restaurant
• A convenience store
• A nail salon
• A dog grooming business

At first glance, it can seem strange to see businesses listed by real estate agents. After all, a business isn’t a house. You can’t inspect it the same way. You can’t compare it to the one down the street with the newer kitchen and the finished basement. You can’t walk in, admire the light fixtures and decide whether the family room works for Christmas.

Business sales live in a different world but that doesn’t mean real estate agents can’t be involved and in Ontario, they often are part of these sales. The rules around real estate trading are broad enough to include businesses, leasehold interests, fixtures, stock-in-trade and other goods connected with the operation of a business.

While real estate agents can sell businesses, the real question is whether they should do it.  After all, there is a pretty big difference between being allowed to do something and being good at it.

Let’s look at how selling and buying businesses through real estate agents works, starting with what’s actually being sold.

Wait, if there’s no land, how is it real estate?

One of the first and most confusing aspects of real estate agents selling businesses is that the businesses may not actually have any real estate attached to the sale.  How can real estate agents sell something without any actual real estate?

The current legislation that governs real estate sales in Ontario is called TRESA, which stands for the Trust in Real Estate Services Act.  Before all legislation came with pithy titles, they were more descriptive and the legislation that governed real estate up until a few years ago was called REBBA, or the Real Estate and Business Brokers Act.  As the name implies, real estate agents were also very much intended to be involved in the sale of businesses.

As of today’s date, (June 12, 2026), the MLS system has over 1,500 business for sale with real estate agents in the Greater Toronto Area, with about half of them located in Toronto.  These are businesses that don’t include property and are strictly business sales.  This article focuses on the business sale side of the equation as it is far less understood.  If a business does have a building or land included with the transaction, then the value and aspects of that land are considered in addition to the value of simply the business and its inclusions.

What’s your budget?  Actually, never mind, we’ll find you something.

If we exclude the 50 or so listings that are for sale for $1 – because the agent just doesn’t know the price to list it for sale at – then they range in price from $6,000 to up to $2.2M.  If that seems like a heck of a range, it’s because what is being sold varies tremendously.

At the low end of the scale, the business for sale has extremely limited assets and is most likely not making much money.  Typical types of businesses in the under $50K list price range are beauty salons, small cafes, small convenience stores, small medical practitioners (orthotics, optometry, etc.) and so forth.  The physical location is small, they have low value equipment or stock and what you’re buying is basically the fact that consumers are (presumably) familiar with the business at that location and may use it.

On the high end of the scale, you’re looking at businesses that have very large physical locations, with significant assets and reoccurring revenue.  Some examples of businesses in the $2M plus list range are 10,000 sf indoor playgrounds, countertop manufacturing businesses, established brewery restaurants and so forth.

Let’s get into the factors that impact the list price and value of a business.

The location is often the business.

The reason business sales and real estate overlap is usually pretty simple – the business is tied to a place.  After all, a restaurant is not just a collection of tables, chairs, ovens and saucepans. It is also the corner it sits on, the people walking by, the signage, the parking, the patio, the lease, the rent, the zoning, the landlord and the fact that customers already know where to find it.

Consider a hair salon with loyal clients, six chairs, trained staff and a lease in a strong plaza.  That’s not just selling scissors and mirrors, but an ongoing concern.  This is also true for a convenience store beside a school, condo building or busy transit stop, that isn’t just selling shelves, chips and fridges.

In many cases, the real estate component is not a side issue. It is the main issue.  This is true even if the business may not own the building or any land, as we’re discussing here.  While some businesses you see in your neighbourhood and near your work may own the property they operate out of, many are in fact simply tenants.  With such businesses, there is often lots of value in the commercial lease they hold with their landlord. If the lease cannot be assigned, the landlord does not approve the buyer, or the rent is about to jump to a level that kills the profit, then the “business” may not be much of a business at all.

Buying a business is not like buying a house.

 When you buy a house, you are mostly trying to answer a few big questions.

• Do we like it?
• Is it worth the price?
• Can we afford it?
• Is there anything wrong with it?
• Will it be good for us for the foreseeable future?

A business purchase has all of those questions, plus a bunch more that are much harder to answer.

• Does the business actually make the money the seller says it makes?
• Will the customers stay after the owner leaves?
• Are the employees staying?
• Is the equipment owned, leased, financed, broken, obsolete or excluded?
• Is the inventory included?
• Can the lease be assigned?
• Are there permits or licences that need to transfer?
• Are there supplier agreements?
• Is this a franchise?
• Does the franchisor need to approve the buyer?
• Is the business being sold as assets or shares?

That is where these deals can get messy. You are not just buying something you can see, you’re buying a collection of rights, relationships, records and assumptions.  While some of those things are valuable, some are not, and some disappear the minute the current owner walks out the door.

…and goodwill to all!

There’s a concept in business valuations that is either a critical part of the value or a way for a seller to push the price up well beyond what it is actually worth.   Let’s talk about “goodwill”.

Goodwill is a magical concept that comes into play when the whole is worth more than the parts.  It involves other nebulous concepts like reputation, presence and track record.  If you encounter a business that is selling (or trying to sell) for more than the value of what is being sold, then the excess is often ascribed to “goodwill”.  To be clear, that isn’t goodwill towards the seller from the buyer, it is positioned as an intangible but nonetheless valuable component of a business that the buyer must pay for in addition to the more easily quantified aspects.

Let’s think about a business that is highly transferable, such as a well-run franchise in a good location, with established systems, trained staff and clean books.  A business like this may sell for much more than the value of its parts, because it may very well be able to keep running without much drama after the sale.

Other businesses are really just the owner, wearing a business costume.  The clients come because they like the owner, the suppliers give good terms because they trust the owner, the staff stay because of the owner. The recipes, systems, relationships and daily problem-solving all live in the owner’s head.

If the seller is the reason the business works, the buyer needs to understand what likely happens when that seller is gone. A few weeks of training after closing may not magically transfer years of relationships, habits and local goodwill.  This is why “goodwill” is such a slippery concept.

Goodwill attached to a location can be valuable, goodwill attached to a brand can be valuable, goodwill attached to repeat customers, strong reviews, staff systems and consistent operations can be valuable.

Goodwill attached entirely to Frank, who has personally known every customer since 1997, is a different thing.  No offence to Frank.  Frank may be fantastic, but unless Frank comes with the sale, the buyer should be careful about paying too much for Frank’s goodwill.

Let’s get to the most real estate-y part of this whole thing.

 For many small businesses, the lease at the existing location is effectively what is being sold.  It’s not the paint colour or the cappuccino machine, or the cute logo on the front window.  All of these things can be done by a business owner at a new location, often for less cost.

The lease is what makes someone wanting to run a certain type of business in that specific location decide to buy an existing business rather than just start one.

When we work on behalf of our business buyer clients, there are lots of questions we ask about the lease.  Some of these questions are about how long is left, what the rent is, what additional rent or TMI is payable, whether there are renewal options, whether the lease can be assigned and whether the landlord has any right to change terms when the business is sold.

A cheap rent in a good location can create real value, while a short lease with no renewal option can destroy it.  Let’s not forget that a landlord who will not approve the buyer can stop the deal entirely.

There are often aspects in a commercial lease that allows only a very specific use for the property, so if you have plans on adjusting what the business you just bought does at that location, you may discover you can’t actually do it as per the terms of the lease.

Commercial leases are considerably more complex than residential leases, and there are far less protections on both sides.  If you make assumptions that the same rules apply to your commercial lease as you’ve experienced with residential leases, you’ll be in for a world of trouble.  You could buy the business then six weeks later be informed by the landlord that the building is being sold and your lease is terminated in 90 days.  You could encounter a problem with the HVAC system at your new premises, reach out to the landlord to get the AC working again and be told that replacing that system is entirely your cost, as per the terms of your lease.

In our work with landlord and tenants on the rental of commercial properties or the purchase and sale of businesses at commercial properties, we often see inexperienced buyers where they treat the lease in far too casual a fashion.  They talk about the equipment, the menu, the sales and the “potential”, then leave the lease review until later. That’s backwards, because if the lease does not work, the rest of the deal may not matter.

Let’s talk numbers.

Business listings can sometimes have a generous relationship with reality.  You may see phrases like:

• “Owner states sales are much higher.”
• “Lots of cash business.”
• “Great potential.”
• “Easy to increase revenue.”
• “Seller only works part-time.”
• “Expenses could be reduced.”

While all of that maybe true, buyers should not pay for maybe, and if a seller wants to be paid for business income, the seller should be able to prove business income. That means actual records, not just a confident conversation at the back table after the lunch rush.

A buyer should review tax returns, financial statements, point-of-sale reports, bank deposits, HST filings, payroll records, supplier invoices, rent records and utility bills.  Many small businesses have challenges with recording and reporting their financial transactions and that can make those businesses effectively unsellable.

This isn’t because potential buyers are being difficult, it’s because if a business is being sold based on profit, the profit needs to be supportable. If the seller says the business makes far more money than the records show, the buyer has a problem.

Actually, scratch that – it’s not just the buyer.  The lender has a problem, the accountant has a problem, the lawyer may have a problem. In fact, it’s likely that everyone has a problem, except perhaps the seller, who would very much like to be paid for income that was not properly documented.

Small time or big time?

One of the big components of a business sale that determines whether this is a simple, smaller sale, or a larger more complex sale is whether it is an asset sale or a share sale.

 In many smaller business transactions, the buyer purchases the assets of the business. That may include equipment, inventory, leasehold improvements, the trade name, website, phone number, that magical goodwill and certain contracts.

In other cases, the buyer may purchase the shares of the corporation that owns the business and those are not the same thing.

With an asset sale, the buyer may be able to choose the assets they are buying and avoid taking on certain liabilities. With a share sale, the buyer may be stepping into the corporation’s history, including contracts, tax issues, employee obligations and liabilities that may not be obvious at first glance.

There can also be major tax differences for the seller, so this is not the part of the deal where anyone should be winging it.  While we can help coordinate the process and make sure the right conditions are included in the agreement, the question as to whether an asset sale or share sale is better it very much lawyer and accountant territory.  We work closely with our client’s law firm and accounting firm when preparing for a purchase or a sale of a business, so if you’re considering either, talk to your people.

In addition to the real estate agents involved, business sales often involve the buyer, seller, two lawyers, two accountants, a landlord, a lender, a franchisor, suppliers and sometimes a licensing body. If no one is managing the flow of information, the deal can get bogged down very quickly and a good real estate agent helps keep things moving.

Business sales can absolutely involve real estate agents, but they should not be treated like ordinary real estate deals.  The buyer is not just buying furniture, equipment and a sign over the door. They may be buying income, lease rights, goodwill, staff continuity, contracts, systems and the hope that customers keep showing up after closing.

That requires more due diligence than a typical property purchase and if we’re blunt, it also requires a bit more humility from everyone involved.  We need to help with our area of expertise and not advise or interfere in other aspects.  The buyer needs to verify the numbers, the seller needs to prepare proper records, the lawyer needs to review the structure and documents, the accountant needs to look at the tax and financial side and so on.

Within our team we regularly work with clients who are looking beyond standard residential purchases and into investment properties, commercial opportunities and more complex real estate-related transactions.  If you are considering buying or selling a business where the location, lease or real estate component is a key part of the value, get in touch with us. We can help you understand the real estate side of the transaction, ask better questions, and connect the dots with the other professionals who should be involved.  Let’s talk!

We see a lot of real estate listings on our team and we would say we’re pretty hard to surprise when it comes to choices made by listing agents.

Whether it is a poor decision on which photo to use, misspelled or improperly used words or just an overall low level of effort put into the listing, we regularly see listings that could use some improvement.

In our work with a client this past week, we came across a listing for a semi-detached house located in the east end of downtown Toronto.  Here’s the run down.

• It’s an income property, with four rental units in it, bringing in about $90K a year in rental income.
• It’s registered as a residential property having three self-contained units, but it isn’t unusual for a basement unit to be added into the mix.
• It’s a pretty small lot, under 20 ft wide and it is also shallow, at just 70 feet deep.
• There are no parking spaces with the property, but it is close to some TTC stations.
• It’s being sold in “as is, where is” condition, so probably not in the best shape.
• It has been on the market for 100 days as of the date of this article.
• The last time it was on the market was back in 2008 and it was for sale for $750K. It didn’t sell and the same owners have held onto it since then.

The only other thing you should know about the property is the list price, which is $25,000,000.

Yes, you read that correctly, they are asking $25 million.

If you do the math, that works out to over $1.3M per foot of frontage.  We know Toronto real estate is expensive, but that feels a bit excessive.

Is it the cathedral ceiling in the 3^rd floor living room that allows it to ask this price?  Or the fact that it is a vintage Victorian home that comes with central air conditioning?  The answer lies outside of these features and above the home itself.  Here’s why they are asking this price and why they think it’s worth it!

A zoning change can mean a huge valuation change.

The first clue as to why the list price for this small lot with a semi-detached house on it is $25M can be found in the remarks for clients on the listing, where the agent says “Zoning Recently Changed To Allow Up To Approx 30 Storeys”.

While this building has sat on a busy street near lots of commercial properties for decades, it is just recently that the zoning was changed to allow for “as of right” heights that would make building a condo tower possible.  A quick review of the prior zoning for the property shows it was 16 metres, which is a far cry from 30 storeys!

It’s not the air conditioning, it’s the air rights.

While this property has been listed a semi-detached, the list price is actually reflective of just the land value.  The building on the property, the tenants in place, the improvements done over time, the rental income – all of it pales in comparison to the value that a developer could realize by tearing down the existing structure and building a new, high density tower on the lot.

It is what is above the existing house, the air that the property also has the right to build up into, that makes this property worth a lot more now that it used to be worth.  Just 14 years ago, the seller would have taken $750K for the property, but with these zoning changes, they are now asking for over 3000% more!

Will they get it?

That is of course the big question.  Anyone can ask any price for a property.  In order for a deal to take place, you need a buyer who is willing to pay a price that the seller is willing to accept.

There are other nearby listings for similar properties in a similar situation that are asking for even higher prices.  When a developer is considering buying a small plot of land for $25M or $40M, they need to have a very good handle on what it will cost to build a high-rise tower, how long it will take, what financing is available and what the eventual sale price of the units in the tower could be in a future market.

It’s a complicated exercise, and only time will tell if the sellers of this property have stars in their eyes or if they will realize a huge windfall from the zoning changes that have been put in place.

Not all zoning changes are as dramatic as this example, but the value of any property can be significantly impacted by what is permitted to be built on it.  When the highest, best-use for a property changes, the value can change accordingly.

If you love the idea of buying a property that could see a huge value increase due to a zoning change, then let’s talk.  You can get in touch with us here.