How does residential Real Estate differ from commercial:
Personally, I only deal in residential real estate and have little exposure to commercial real estate, however, there are various large differences between the two fields. Residential real estate is much more efficient as there are more buyers and sellers, market prices are usually efficient and reflective of market demand and supply. Commercial real estate is much different, market prices vary due to limited supply and demand, long duration of leases, economic condition, and many other endogenous variables. Due to this, commercial real estate demands greater due diligence. Property valuations are more ambiguous and require greater analysis. Even within the same building, tenants can pay vastly different lease rates and this is due to timing, use of property, and layout. In short, commercial real estate is more math based and requires deep analysis to determine pricing whereas residential is more redundant because there are endless buyers and sellers continuously correcting any market inefficiencies. Commercial real estate typically is on the market longer as there are less buyers/tenants in general. Commercial real estate also consists of longer negotiation periods as both parties can be greatly impacted by the price of the property/lease. The brokerages surrounding the two fields vary as well. There are endless branded and unbranded real estate brokerages for the residential sector but it is a much more exclusive and limited field for commercial real estate with a few large names accounting for majority of transactions.
How does buying differ from lease:
Buying differs from lease in various ways, the most obvious is when buying there is a change in title whereas there is no such transfer in a lease. Residential leases usually last 1-2 years whereas commercial leases can commonly exceed 10 years. A lease is a contract set up between the landlord and tenant where the tenant acquires the right to use the leased space for a certain reason, at a certain price, and for a certain duration. When buying, the buyer is looking to transfer property rights from the seller indefinitely. Once the transaction is complete, the seller no longer has claims to the land and real property and the new owner has full rights to exploit the property to their full enjoyment as long as they are abiding by the law and city bylaws. In a lease, there are often limitations such as what the property will be used for. A common example is limitations to the number of stores in a mall selling the same general product. A home furniture store might lease somewhere and in the contract, it stipulates that they are the only store in the mall allowed to sell home furniture, meaning no new store can open in the mall that sells home furniture for the duration of lease of the original store. In short, leases have a lot more regulations and limitations compared to buying, however there is also less risk as the lessee is not impacted by negative property value shocks.
What are the most common tasks:
The most common thought for realtors is coming up with ways of obtaining the next lead or getting that next deal because whatever happens today will not last us forever. We have daily expenses of business that cannot be cut back without it negatively impacting future business, almost like a double edge sword. A good example of this is marketing, cutting back will decrease expenses today but then decrease the number of possible leads in the future which directly cuts income. Realtors are always looking to find ways to market themselves, and this is where the greatest amount of effort and time is spent. Whether it be door to door marketing, maintaining current client relations, designing posts/blogs for social media, or attending events in hopes of building grassroot community relations, there is always more to be done in this sector. By properly marketing, this will ensure future income for realtors and ensure that we are not forced to cut back on fundamental expenses.
When we do get the lead or client, we must do the proper paperwork and due diligence for the specific client. For listings, we must take pictures, write descriptions, create marketing material, and so much more while complying with regulations. For buyer clients, our job is to show them various properties that fit the description of what they are looking for while comparing them with sold and current properties to ensure that the buyer client is paying fair market price for whatever property they have interest in. The most important thing for realtors is properly representing their client whether buyer or seller to the best of their abilities and dealing with full honesty and transparency to build a long lasting relationship with that client. Doing so will automatically give referral business to the realtor in the future.