All You Need to Know About Commercial and Residential Real Estate

Comparing residential real estate to commercial real estate is similar to comparing oranges with apples.  Both of the items are from the same genre, but this is where the similarities end.  Below is a description of the two different real estate types:

Comparing residential real estate to commercial real estate is similar to comparing oranges with apples.  Both of the items are from the same genre, but this is where the similarities end.  Below is a description of the two different real estate types:

Commercial real estate is considered to be a more business-focused form of real estate.  It involves that selling, leasing, and use of properties for predetermined business objectives.  Commercial or corporate real estate is typically an investment to achieve a predicted rate of return on the invested funds.

Contrary, residential real estate involves the needs and wants of a homeowner and his or her family.  The real estate, in this case, includes property purchased or leased for individual usage, most often to provide housing for the homeowner and family.

“The selling procedure for commercial real estate revolves around numbers with return-on-investment calculations,” explains an expert from Curchod & Co, Camberley. Whereas, residential real estate sales is not as cut-and-dry because of its emotional component.  The majority of buyers in residential real estate sales will make decisions based on how the house “feels” and the key factor is the return on investment.

What Exactly is Residential Real Estate?

The basic concept behind residential real estate is that it focuses on personal property use.  In most cases, the residential agent will represent the seller or buyer of the single or family home.  However, within the real estate arena, estate agents can also engage in the following specialty areas:

  • Selling Secondary Holiday Homes

One area of specialism for real estate is the selling of secondary holiday homes to individuals searching for a “home away from home”.  The second home market is potentially one of the quickest growing areas in the residential real estate.  According to statistics, in excess of 21% of all sales in 2004 were secondary home purchases made by the new homeowner for investment purposes.

  • Working for a Builder of New Homes

Another area of specialism in the residential real estate industry is working exclusively for a company or individual building new homes.  This is typically served as an on-site salesperson for the new home community and in this role, the agent will sell the homes.  If the buyer needs to sell a current home outside of the existing community, it is typical that another real estate agent will handle the sale.

  • Representing Real Estate Investors

It is also possible for a residential real estate agent to represent real estate investors who are interested in increasing their personal wealth via ownership of properties, such as houses, duplexes or triplexes.  A small-scale multiplex is often handled by a residential agent rather than a commercial agent because the purchaser tends to live in one area of the multiplex; thereby, creating a residence as part of the investment property.  Moreover, a purchaser buying a multiplex can make the purchase using a conventional mortgage.
Residential real estate agents will rarely help sellers or buyers of multiplexes with over three units.  If a person is interested in a larger complex, then they would need to get a real estate loan and this involves a more restrictive set of regulations than residential agents are able to support including shorter amortisation schedules, higher interest rates, and higher initial down payments.

What Exactly Is Commercial Real Estate?

Commercial real estate centres on business or investment use of the property.
In this type of real estate, you will be able to sell, buy, or lease as a lessor or a lessee, joint venture, syndicate, option, develop and invest in a plethora of commercial real estate categories.  The real estate categories include industrial real estate, apartments, investments, retail, office and raw-land leasing.

Commercial real estate representatives tend to be aware of the different real estate areas, but they may specialise in any of the following disciplines:

  • Representing Tenants or Lessees

Commercial agents can specialise in representing tenants or lessees by locating, selecting, and negotiating new spaces for the businesses.

  • Representing Investors

Agents can represent investors interested in selling and buying commercial real estate by offering the lowest risk opportunities to clients.