I had 14 years of intense commercial real estate before I entered residential about 11 years ago.  I feel fairly well qualified to talk about the differences between the two disciplines.  If someone were to ask me what the major differences are between commercial and residential, I would say there are four major areas ... the common use of attorneys, the complexity of the negotiations, the contracts, and the length of time it takes to complete a transaction. 

Commercial Real Estate

I represented many tenants on leases with large landlords.  The landlords were often huge pension funds owning millions of square feet all across the country.  They had their own lease contracts and required all of their tenants to use them.   It stands to reason, those agreements were onerous (one sided) towards the landlord.  Many of the tenants I represented were also large companies with their own attorneys on staff. 

What this meant was even if the landlord and tenant arrived at an agreeable lease rate quickly, that was only half the battle.  The other agent and I then had to navigate the divide between the two attorneys representing their clients.

I might give the lease to an attorney on a Monday for review and be told I will have it back by Friday.  That usually translated to sometime the following week.  After that attorney made his comments (aka ... objections), the lease went back to the other attorney, where the same thing happened.  Even with an agreement in principle, days turned into weeks and many times, weeks into months.  The only thing that speeded up the process was a looming lease expiration.

Some attorneys were "deal makers" and reasonable in their expectations of what they should ask for.  Others were "deal breakers" who seemed to contest every point of the contract no matter how minor.  They were not dealing with reality.  Unfortunately, sometimes the attorneys themselves were the determining factor on whether we could even complete the transaction.  You just don't see that environment in residential.

Commercial transactions, by nature, are usually much more complex than buying or selling a home.  The purchase of a multi-tenant building might have addendums for tenant option renewals, expansion options, expense reimbursements, tenant estoppels,  subleases, etc.  There might be issues on parking, zoning, underground storage tanks, flat roofs, abandoned easements, setbacks, etc.  Complex transactions require complex contracts, which also require attorneys on both sides.  For all of these reasons, commercial real estate transactions just take time to close.

I would suggest to anyone thinking about entering commercial real estate to plan on at least one year before they start to see some income.

residential Real Estate

In comparison, a thirty day closing is the norm in residential, and I have closed homes in as few as 7 days, start to finish.  Most of the issues that come up in buying a home have to do with repairs, and those can usually be worked out quickly if both parties are willing. 

But what really speeds things up in residential is we use contracts approved by the Texas Real Estate Commission, not third party contracts.  These TREC contracts are highly refined after many years of revisions, easy to use and understand, and most importantly, they are fair to both sides.  Both sides know what will happen if they perform, and what the consequences are if they don't.  A good, experienced Realtor knows those contracts intimately and should be able to answer any questions their client might have about them. 

A final thought

I don't know if residential agents really appreciate how great they have it, but I will tell them if asked.  Between the services TREC, the Collin County Association of Realtors, the MLS, and Realtor.com provide, every opportunity and resource is given to us to be successful and make money ... quickly!  A hard working and smart working Realtor can break into residential much easier in residential than commercial.

Commercial brokers have never enjoyed many of the luxuries that are afforded to residential agents, but much of that is brought on by their culture.  Commercial brokers have always been secretive and non-trusting with their information.  They don't want an information sharing environment, much less having to work with residential agents who might have access to that information.  Frankly, they tend to scoff at the residential side.  But just as I tell residential agents how lucky they are for what they have, I tell my old commercial friends how far behind they are when it comes to marketing properties effectively and efficiently.

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Tom Grisak Estate Homes Realtors, Inc - Texas License # 0329533