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The Major Differences Between Commercial and Residential Real Estate

Whether you’re just starting out in the real estate world or you’re looking to branch out into other avenues of the business, it’s important to take a good, hard look at the differences between the commercial and residential sectors. This way, you can determine which type of property you’d prefer to specialize in, and which is best for your particular skill set.

Commercial Real Estate

Commercial real estate agents sell properties like office buildings, apartment buildings, shopping centers, and other larger properties. As far as licensing, education, and experience goes, the commercial real estate world is a bit different than the residential one. Unlike in residential, commercial real estate require an in-depth understanding of the market, so prior real estate experience and a degree in finance or business is extremely helpful. Agents can opt to work in a variety of areas, including project management, actual development, and leasing; commercial agents can also assist with the sale of a commercial property by representing buyers or sellers.

In general, commercial properties tend to experience lower tenant turnover, and you’ll also deal with far fewer tenants than in the residential sector. However, commercial leases are often longer and much more complex than residential rental agreements.

When it comes to staging a commercial property, prospective tenants must be able to visualize their business being located there—which means that agents have to show off the space and the location well. This entails sprucing up and organizing the whole property, making sure the landscaping is neat and tidy, and improving the property’s curb appeal. (There are dozens of ways to do the latter, from putting greenery out front and washing the windows to refreshing signage and redoing the paint job.)

Residential Real Estate

Residential real estate agents, on the other hand, sell residential properties (these tend to be easier to sell, although it must be noted, there’s much higher earning potential in the commercial real estate world). You don’t need to have a college degree to become a residential agent; each state has a specific licensing process. Once you’ve taken your exam and obtained your license, it’s crucial to become well-versed in the geographical area you’ll be serving in, on everything from school districts to available public transit to the general vibe of each neighborhood. Being able to have a successful career in residential real estate hinges on this kind of insider knowledge, among other things.   

Residential properties experience higher tenant turnover rates than commercial ones, of course, which means there’s a greater need for agents in this sector. It’s also a much more personalized sector, since people tend to have greater emotional attachments to their homes than to commercial properties.  

In terms of staging a residential property, curb appeal is just as important as in commercial: Realtors know that good first impressions are crucial, and first impressions depend almost entirely on curb appeal. If prospective buyers or tenants walk up to a property and see neatly trimmed hedges, sparkling clean windows, a fresh coat of paint, and attractive greenery and outdoor décor, they’ll be much more likely to find the property appealing.

The Bottom Line…

Agents who work commercial and residential real estate operate in different ways, and each sector has its pros and cons. Apart from the types of properties you’ll be selling, there are several key differences between the two sectors to take note of. Once you’ve done this, you’ll be ready to branch out, find your network, and explore exciting new career options and income potential.

Safety for Real Estate Agents

Real Estate typically isn’t the first career field you think of when you think of the world’s most dangerous jobs. In fact, it’s a pretty safe (and fun, if we may add) industry to be in! However, you should always be cautious and keep safety in mind while showing homes, meeting clients, or even spending a day at the office. Below you’ll find a few tips from Michigan Institute of Real Estate to keep you and your fellow real estate agents safe!

Use the buddy system.
You’re much less likely to be the victim of a crime if you are in a group. If you’re meeting a client for the first time, take someone with you. Exchange numbers with a few fellow students in one of your Michigan Institute of Real Estate classes, so you always have a buddy to call. Feel free to say that you’re training them, or that they’re your assistant. Your client won’t think anything of it, and your mind will be more at ease.

Protect yourself.
There are several ways to defend yourself if you do end up in a dangerous situation. Ask your location police station or recreation center about signing up for self-defense classes. Many of them are offered through your city or county, and some are even offered for free!

You can also carry a few different items to protect yourself in a crisis. Amazon sells a pepper spray keychain that easily clips to your belt or purse, and this Youtube video can show you how to use it. Similar pepper spray keychains can also be found at local sporting goods stores or drug stores. If you’re comfortable carrying something with more force, Michigan allows you to carry a folding pocket knife as long as the blade is single-sided and under 3”. These can also be purchased at most sporting goods stores, and of course, should only be used in self-defense.

Some realtors elect to take advantage of Michigan’s concealed carry law, which allows you to carry a pistol after proper training and approval by the state. The application process can take up to 45 days, and does not permit you to buy a firearm. After a background check and application, you can purchase a pistol at a local sporting goods store or gun store. Before you begin carrying it, you should know everything about the weapon you’ve purchased. This includes being confident in firing it safely and accurately. Carrying a gun is a serious decision and is a heavy responsibility. Although it’s a great option in keeping you safe as a real estate agent, you should carefully consider all of the responsibilities that come with owning and carrying a gun.

With each of the above options, be sure to verify all laws and regulations with your local police department or city office.

Know your client.
Be sure that your client presents themselves as a serious buyer or seller. Are they pre-approved? Do they know what kind of home they’re looking for, or have a specific reason for selling? Make sure you ask a few qualifying questions and watch for red flags. If it seems like this may be the first thought they’ve given to buying or selling, it could be cause for concern.

Check in with coworkers, friends, or family.
When you’re working, someone should know where you are at all times. Try keeping an online schedule or calendar that you can digitally share with someone. That way, someone always knows where you are when you’re working. If you prefer a simpler method, sending a quick text is a great way to keep your loved ones in the know in case there’s an emergency.

Last, but not least, trust your gut.
If something seems fishy to you or makes you uncomfortable, trust your instinct. Never allow yourself to stay in a situation that you feel may not be safe. If your gut tells you something is off, it’s probably right!

The best way to stay safe as a real estate agent is to always keep safety in mind, whether you’re working or relaxing. If you use street smarts and stay prepared, you’re much more likely to avoid a potentially dangerous situation. We at Michigan Institute of Real Estate value the safety of our students as much as their education!

Ready to become a real estate agent? View our upcoming classes here!

Thanks for reading, and stay safe out there!

From Everyday Agent to the Investor’s First Choice

Becoming an investor’s first choice is a much different ball game than selling homes to consumers. Find out how in our guide to attracting real estate investors to your business.

Know the Market

First and foremost, do your homework. You should understand the ins and outs of the real estate market just as well, if not better, than the investors you’re seeking out. Immerse yourself in the local markets first and broaden your scope as you become more familiar with the area and trends. Have confidence in yourself and your knowledge, especially around those who may be new to real estate investing. More than first-time homebuyers, these clients are looking for mentors and someone who’s in the weeds of the market day in and day out; those who can walk them through the process while building a trusting relationship. 

Increase Your Lingo Fluency 

Real estate investment is a culture with a codex of terminology that requires fluency if you wish to be successful. Research common abbreviations and acronyms and familiarize yourself with the ways they are used in both everyday communication and in print media. If you enjoy hands on study material, look into Advanced Real Estate Training that covers investing and home flipping. Like any other language, using words or phrases incorrectly is a telling indicator of how well you actually understand what you’re attempting to communicate. In such cases, you may end up coming across less adept than you would have if you hadn’t made the attempt at all. 

Learn to Identify Investment Goals and Timelines

Every client has a set of timelines in which they expect to meet their investment goals. The best way to identify these expectations is to practice active listening; you should always be attentive, ask thoughtful questions, seek clarification, and paraphrase or summarize your client’s requests when needed. This’ll not only help you understand your client’s request, but it may also help them to solidify their own ideas and expectations. Once you’ve established an understanding, take careful steps to keep those goals and timelines on track. Check in often and be available as much as possible. 

Presentation Matters

Know your audience! Investors are looking for properties that will ultimately increase in value over time, even when updates and remodels must be made. They care less about the look and feel of a property and more about the numbers. As such, when you’re putting together a presentation to show a client, ensure that your materials reflect their needs. For example, does the kitchen need a facelift? How much will it cost, and what can the investor expect to recoup on resale? 

Fulfill a Niche

Set yourself apart from other agents and fill a necessary niche. This aspect is a bit more open-ended and may depend on skills you have outside of your real estate business. One way could be expanding your service line and becoming Home Inspection Certified so your clients can rely on you for more than one area of the investment process. For instance, if you have an eye for design, you might have a leg up when helping clients reimagine a property. Or, you may have an in with local contractors, electricians, plumbers, or other service providers that investors need in order to fulfill their vision of the property. Even if you don’t have a long list of contacts now, it’s essential to boost your network and make those connections; when your clients begin to trust you and your business, they will also look to you for advice when seeking out these services. Do your research, and only suggest the best of the best! Having these contacts at the ready will make you an invaluable resource, and your clients will keep coming back. They will share their positive experience with others, helping you to grow a successful business.

Make Yourself Available

Finally, it’s essential to stay in constant communication with your clients. Check in with them often and share any new developments right away. If you’re going on vacation or are otherwise unavailable for a period of time, make sure to let them know well in advance. If you miss an email or a call, respond in a timely manner. Once you establish trust in the relationship, you’ll be able to foster a loyal and successful clientele for the long haul.

Written by Haley Kieser.

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