At first glance, residential and commercial real estate agents have similar job descriptions. They both help their clients find real estate that meets their needs in terms of usable space, location, and price. They both analyze the market conditions to ensure that their client is making the best choice for their needs and budget. The difference between residential and commercial realtors lies in the type of real estate that they help buy and sell.
Residential real estate agents
Residential agents typically work with individuals seeking to buy a home to live in. Occasionally, they work with businesses interested in buying a residential property as an investment to either rent or fix and flip. Residential agents are licensed to sell single-family homes, condominiums, and vacant land zoned for both residential and agricultural purposes.
Commercial real estate agent
While a commercial realtor may communicate and show properties to an individual person, the transaction is typically finalized in the name of a business to capitalize on tax advantages and to protect buyers from potential liability.
Commercial Realtors may start off as residential realtors, but it is more common to go directly into commercial real estate. Training, state licensing exams, and the National Association of Realtors' designations are completely different for each specialty. Switching from one to another would essentially be starting over in your choice of careers.
Once licensed for commercial real estate, an agent can sell office, retail, and industrial buildings, as well as lease space in each.
Multi-plexes
The one area that both types of real estate agents appear to overlap is multi-family housing. A building designed with two, three, or four rental units, sometimes called duplex, triplex, and four-plex, is considered residential and will be represented and sold by a residential real estate agent. On the other hand, buildings with more than four rental units are deemed commercial properties and can only be bought or sold with the assistance of a commercial agent. This difference may seem arbitrary, but the distinction between four and five-unit multiplexes was made by the US Federal Housing Administration, more commonly known as the FHA.
It is important to note that when buying a multiplex larger than four units, in addition to needing a commercial real estate agent, you will also need a commercial loan. Residential loans are only available on smaller units.
Commercial real estate is a much more complex purchase than residential real estate. It is important to remember that working with an experienced commercial realtor is the key to a successful transaction.
For more information, contact a local real estate firm, like Weichert, Realtors® - Good Life.
