The difference between commercial real estate and residential are found in the types of properties being purchased. Commercial refers to land or buildings, while residential refers to homes. Also a significant difference is commercial properties are ones that earn income. The types of property for purchase can be divided into four divisions; retail, office, industrial, and multifamily.
Retail real estate includes the purchase of medical centers, mall, hotels/motels, and shopping centers. Office real estate is the purchase of office buildings, usually multi-unit. Industrial real estate refers to the purchase of warehouses, garages, and land use for industrial purposes. Multifamily refers to buildings that house multiple families, different from single family residences. Apartments, condominiums, and duplexes all fall into this category.
Zoning is also important to commercial real estate as it designates the uses for the land. This is one of the most important factors in finding a listing that meets the purchasers needs. Zonings can place restrictions on the type off practice that can be carried out on site.
When buying commercial real estate for the first time, many purchasers are unsure how a residential and commercial real estate agent differ. For the most part, their jobs are the same. A real estate agent handles the listing and showing of properties and coordinates with all other brokers involved in the transaction.
Take, for example, listing a property. It differentiates from residential in how the value is calculated. Many commercial properties are sold with machinery and fixtures that transfer with the property. The broker is responsible to determining their worth and factoring in their value to the total listing price. Future buyers can also request to see all pertinent business records and the agent will need to make sure copies are available.
The task of marketing a listing does not vary much between a residential and commercial broker. There are many ways in which a property can be marketed, especially in the age of internet savvy consumers. Virtual tours are quickly becoming a common tool used to promote a brokers listing. While the methods use to market a sale may not be different, the target audience might as the clientele would not be the same as someone who is trying to buy a home.
Closings, also called escrows, are not much different either. All transactions must be handled through an escrow, a third party, and this is traditionally where the closing documents will be signed by all parties. Regardless of the sale type, all real estate transactions must be negotiated through a third party who also handles the monies. The title company is responsible for finalizing the documents and the sale and also for distributing closing costs.
Making a commercial purchase for the first time is a use financial risk and can be daunting. There are questions that all buyers should make sure the ask the broker when interested in a listing. These questions can help make the decision to purchase less stressful and closing run more smoothly. It is important to ask how long the property has been available. Knowing that a property has been on the market for a long time is helpful negotiating tool. Asking if there have been any closing problems can indicate issues with the property passing inspection. When purchasing any property, it is imperative to ask about it’s condition. A price may seem with a consumers budget, but if a major remodel or investment is needed it may not be worthwhile in the end. As mentioned earlier, asking what the property’s zoning is establishes what the usage for the property can be. Also vital to a purchases knowledge is whether or not the property has any easements. These, too, can restrict usage. Commercial real estate may seem harrowing at first, but as long as a purchaser asks many questions and has a trustworthy broker the payoff can be huge.
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