Commercial real estate differs from residential real estate in that the properties being purchased are either buildings or land. They are intended to earn the purchaser income. This form of real estate is usually divided into four categories; retail, office, industrial, and multifamily. Multi-family falls into not only residential real estate but commercial as well because the owner will be earning a profit from rents paid by tenants.
Retail estate includes the purchase of medical centers, mall, hotels/motels, and shopping centers. Office real estate is the purchase of office buildings, usually multi-unit. Industrial real estate refers to the purchase of warehouses, garages, and land use for industrial purposes. Multifamily refers to buildings that house multiple families, different from single family residences. Apartments, condominiums, and duplexes all fall into this category.
Those new to house search may not know that land for sale is zoned by the city for various purposes. When searching for a commercial property, one of the first things to pay attention is whether or not the listed is zoned for commercial use.
When buying commercial estate for the first time, many purchasers are unsure how a residential and commercial real estate agent differ. For the most part, their jobs are the same. A real estate agent handles the listing and showing of properties and coordinates with all other brokers involved in the transaction.
One of the biggest differences is what is involved when listing a commercial property as opposed to residential. There are many factors that need to be considered when calculating the sale price and also business records that need to be copied for prospective buyers. The value of any machinery and fixtures on the property need to be factored in to the overall cost.
The task of marketing a listing does not vary much between a residential and commercial broker. There are many ways in which a property can be marketed, especially in the age of internet savvy consumers. Virtual tours are quickly becoming a common tool used to promote a brokers listing. While the methods use to market a sale may not be different, the target audience might as the clientele would not be the same as someone who is trying to buy a home.
Closings, also called escrows, are not much different either. All transactions must be handled through an escrow, a third party, and this is traditionally where the closing documents will be signed by all parties. Regardless of the sale type, all real estate transactions must be negotiated through a third party who also handles the monies. The title company is responsible for finalizing the documents and the sale and also for distributing closing costs.
Making a commercial purchase for the first time is a use financial risk and can be daunting. There are questions that all buyers should make sure the ask the broker when interested in a listing. These questions can help make the decision to purchase less stressful and closing run more smoothly. It is important to ask how long the property has been available. Knowing that a property has been on the market for a long time is helpful negotiating tool. Asking if there have been any closing problems can indicate issues with the property passing inspection.
When purchasing any property, it is imperative to ask about it’s condition. A price may seem with a consumers budget, but if a major remodel or investment is needed it may not be worthwhile in the end. As mentioned earlier, asking what the property’s zoning is establishes what the usage for the property can be. Also vital to a purchases knowledge is whether or not the property has any easements. These, too, can restrict usage. Commercial real estate may seem harrowing at first, but as long as a purchaser asks many questions and has a trustworthy broker the payoff can be huge.