Residential vs Commercial Real Estate Agents...5 Differences



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Unless you own a business that has leased or sold commercial real estate, you have purchased or leased commercial real estate for your own account, or you work for a company that has leased or purchased commercial real estate, chances are you have never dealt with a commercial real estate broker.

Most of us have dealt with a residential real estate agent - especially if we have bought or sold a house. The two professions are similar but dramatically different - all at the same time!

This post was written to highlight the differences between residential and commercial real estate agents.

Agents, brokers, and Realtors. Many times these titles are used interchangeably but each has its own meaning. Generally, all real estate practitioners - commercial or residential - are agents. All with the agent designation have passed the California agent's exam and currently hold a license through the California Bureau of Real Estate. California law requires an agent to operate beneath a broker. A broker has passed the California broker's exam and may or may not have agents beneath her. I, as an example, am a broker but have no agents reporting to me. A realtor is a broker or agent that is a member of the National Association of Realtors. Typically, commercial agents are referred to as brokers - regardless of their licensing - and residential agents are referred to as Realtors. In some cases, commercial agents or brokers are members of the National Association of Realtors, but commercial agents are not commonly referred to as Realtors.

Leasing and selling. Commercial real estate brokers can make their living leasing or selling commercial real estate. Most in the biz complete several lease and sale deals every year. Residential Realtors generally don't lease houses - they sell them.

Disclosures. Believe it or not - many, many more disclosures are required in a residential transaction than in a commercial real estate transaction. I believe the reason may be the sophistication or lack of sophistication of the buyer in a home purchase vs. a commercial lease or purchase.

Licensing. Anyone with a California real estate agent's license may transact commercial or residential deals. In other words, no special license - other than an agent's license - is required to sell commercial real estate.

Specialties. Commercial real estate specialties abound - industrial, office, retail, land, income properties, multi family. Additional specialization occurs in the area of owner or occupant representation - in many cases, commercial real estate brokers ONLY represent occupants - not owners. Finally, specialization can occur for specific industries - such as companies that operate distribution warehouses in the Southwestern United States. Conversely, Realtors sell houses. Realtor's specialization occurs in specific neighborhood expertise, luxury homes, or buyer or seller representation.