Why it was necessary to throw away 18 years of real estate knowledge

Real estate knowledgeYou may have sometime in the past chosen a new path believing that your life experience would be a great asset in your new endeavor?  Well that was certainly my thinking 18 years ago!

Previous to that, between the years 1978 and 2006 I sold new and then resale residential real estate. My last four years during that period I was a non-competing Branch Manager.

When the company I had been working for was sold I made a decision to make a move into the world of commercial real estate.

I knew the business would be different but was not prepared for just how different it was. I brokered a few transactions but mostly floundered for about six months, believing I would find my way by approaching the business using my old residential tools.

It was about the seventh month when I finally came out of denial, realized I had to throw everything I knew out the window, and start asking a lot more questions. So why are the two sectors of the business so different?  Here are three of many reasons:

Negotiation Strategy

It was quite common in my residential days to complete the negotiation process in a day or less. Offers were left open for a few hours.

There is no immediate gratification in commercial real estate. You have to be prepared to settle into a negotiation process that at best will take days, but could be spread over weeks or months.

When a client negotiating on a house discovered they were competing with another offer they may increase their bid. In commercial real estate a client in that same circumstance is as likely to simply withdraw the offer and wait for another opportunity.

Documentation

Much of the residential offer and condition process is covered with standard and mandatory forms which are supplied by the real estate licensing body.

The paperwork in my world today, is made up of many different types of in house generated offers to purchase and offers to lease which vary depending upon the sector and complexity of deal. Often we negotiate using a shorter form document to try and speed up the process and proceed thereafter to a formal agreement

Client Profile

In residential real estate I may have dealt with a client every few years as their housing needs changed. The age and gender of that client base varied significantly. Today I have several portfolio clients who I work with on many transactions within one year.

As they say in commercial real estate, the hard reality is that our world is still somewhat of “an old boys club.” It is changing, but it seems that change is taking place very slowly.

Residential and Commercial Agents each offer a unique set of skills and market knowledge. When you are looking for real estate representation, make sure to choose a professional who is an expert in the area you require.

Posted by Barry Stuart

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