CHAPTER 3 Why You Can’t Use a Residential Realtor
I’ve occasionally come across business owners or decision makers trying to get residential realtors to help them navigate the world of commercial real estate. They each sell property. They each have a license. They are each experienced in navigating a deal. There are a few similarities for sure. But they don’t carry over the way you might think. Though each of these careers facilitates leasing and selling properties, the function of the properties differs greatly, as do the different variables. The greatest differences are the leases and terminology First, residential agents usually aren’t required to have a college degree. Commercial agents are. There is a reason for this. They need to have a full understanding of terms like capitalization rate, real estate analytics, gross rent multiplier, and internal rate of return. Commercial real estate has detailed financial aspects that are impossible to jump into if you aren’t an expert. That works both ways. Most commercial agents also aren’t experienced enough in the residential field to jump right into a home sale (though some commercial brokers started as residential realtors and could do that.) Second, as stated before, the biggest difference shows in the types of leases. Though each state has its own laws, the commercial lease is extremely detailed. A residential lease agreement, on the other hand, is simply an agreement between the landlord and a tenant to use the property for a living arrangement. 13
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