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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.

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