IS THERE A REAL DIFFERENCE BETWEEN RESIDENTIAL REAL ESTATE AND COMMERCIAL REAL ESTATE?
There is a huge difference between residential and commercial real estate. The best residential agents wouldn’t even consider doing a commercial transaction and the best commercial agents don’t dabble in residential either. Each sector has a very different approach to the market and commercial real estate has dozens of additional business and economic considerations that residential real estate does not have.
A residential agent is typically making value determinations solely based upon comparable properties in the market. On the other hand, a commercial agent understands how concepts like tenant improvement allowance, build out time, free rent, annual escalations and other options impact profitability. A residential agent is focused on helping their client find a suitable home based upon personal preferences that are most often driven by likes and dislikes along with ‘personal’ design desires. A commercial agent is data-driven, using sophisticated comparisons and calculators to evaluate the best market options for maximizing a business’ profitability. A commercial agent is looking at longer term leases, building or condo purchases and much larger investments, where a small oversight or mistake can add up to hundreds of thousands of dollars lost over the typical term. With that said, there are great differences between commercial and residential agents.
There are expert residential agents and expert commercial agents… but if you find an agent that says they do both, move on to find an agent who only does one or the other.