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Commercial Real Estate

I sell houses. So I can handle commercial properties too, no problem!

Residential vs. commercial agents

In the state of Pennsylvania, we have one category for licensed real estate salesperson, one for licensed associate broker (a broker who is NOT the broker of record), and licensed broker of record. We don’t have categories for residential agents vs. commercial agents — yet a huge gap exists amongst real estate licensees.

So any licensed agent can sell any property, anywhere in the state. Legally, that is. Practically, that is not a true statement. I — in northeast Pennsylvania — am certainly not going to list or try to sell a property near Pittsburgh, on the other side of the state. I don’t know the area, the properties, or anything about the region. I will find a good agent out there and refer the deal, but I won’t list the property.

So why is it that agents who are trained and sell almost exclusively residential properties think they can adequately represent a seller or buyer in a commercial transaction? The same analogy follows, I believe. Selling a $150,000 house, 3 bedrooms 2.5 baths, is not at all similar to selling a $1.2 million gas station or strip mall.

Why can’t we all just get along?

To paraphrase a famous news quote, “Why can’t we all just get along?” Residential vs commercial agents seems to be an agelong dilemma.

Residential agents think they can handle the most complicated deals, even when they truly are out of their league.

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Commercial agents get annoyed at all these “amateurs” playing in their sandbox.

I have seen both sides sniping at each other and their “right” to be in the deal at all.

It doesn’t have to be that way. What’s the goal? Seller finds a buyer, buyer finds a property. We should be able to work together to get the deal done, whether that means referring it out to an expert or working side by side with one. The two sides don’t have to be enemies or combatants.

I was told recently by someone that commercial agents have their own circles, and they only talk / share info with other commercial agents. That’s just silly. But at the same time I can see their side, that residential agents get in the picture and the deal becomes 10 times harder, because of all the extra work the commercial agent has to do to make it happen, because of the residential agent’s lack of expertise.

CAN legally sell vs. SHOULD try to sell

I once overheard an agent “on duty” take a phone call from a consumer, who asked if the agent could handle a large commercial listing. “Of course! I can sell any kind of property at all in this state!” she replied, confidently.

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Yet I knew that she had rarely handled any commercial deals at all, and probably had no business taking that listing, which did indeed turn out to be over her head / capabilities. She was out of her league, but would not tell the seller that.

In fact, I watched her spend hours spinning her wheels trying to get a handle on the property, fielding calls she had no clue what the answers were. That listing expired, and a commercial specialty firm picked it up after her failure.

“But my license says I am legally allowed to list and sell commercial,” the argument goes. Yes you are. But are you truly capable? Do you understand the financing, the nuances, what a Phase I environmental study is? Maybe, but maybe not. Are you representing the sellers adequately if you do not know these things?

Just because legally you CAN list a property out of your realm of expertise (location, type, etc) does not mean you SHOULD. Period.

What do you do?

So if you get a lead on a commercial property — a large deal. A big fish. That property that other agents salivate over and it lands in your lap… yet you feel in your gut that you may be stretching. What should you do?

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You want the listing. You can taste it! You don’t want to lose it all. But you don’t want to screw this up either.

Refer it out

Is someone in your office a commercial guru? Refer it to him for a fee. Or go out of office to a commercial brokerage, and give it to someone who CAN handle it. At least you’ll get a piece of something, rather than zero when it expires.

Find a partner

This is what I have done. I am the broker of record, own my own office, and have listed and sold commercial properties over the past 10 years. Yet I admit I don’t know it all, and sometimes I have too much on my plate to devote to a single large commercial parcel.

My solution was to find a partner. Someone I trust, and work well with side-by-side. I found that in a commercial agent from a nearby city. When I list a “good” commercial property, I bring him in and we tag-team the deal. We split the commission, and co-list the property. Both of us work the deals and we complement each other’s strengths.

I am the local angle, he works national. When someone needs to be on site, quickly, it’s me. When someone needs to push out marketing materials nationally, it’s him. I enter it on local MLS’s and he does it with the commercial websites. And we share the proceeds of whatever we sell.

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Sometimes I feed him buyer or tenant leads, other times we’re listing commercial properties side by side. It works. But you have to find someone who works well with your personality, and someone who you trust implicitly. Any doubts and it doesn’t work — kind of like marriage. It is sort of a business or work marriage. Trust is the key.

Want to work commercial? Get help.

Commercial is indeed a different animal. It is not another house that you can just pop a sign on and put in the MLS. There are different skill sets needed and if you want to get your feet wet in it, just get some help.

Ask someone to be your mentor, or to share deals with you. Find a partner, someone who will help you get started. Just get help, because especially in today’s economic environment, you’re going to need it.

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Written By

Erica Ramus is the Broker/Owner of Ramus Realty Group in Pottsville, PA. She also teaches real estate licensing courses at Penn State Schuylkill and is extremely active in her community, especially the Rotary Club of Pottsville and the Schuylkill Chamber of Commerce. Her background is writing, marketing and publishing, and she is the founder of Schuylkill Living Magazine, the area's regional publication. She lives near Pottsville with her husband and two teenage sons, and an occasional exchange student passing thru who needs a place to stay.

11 Comments

11 Comments

  1. Joe Loomer

    June 2, 2010 at 10:25 pm

    Erica,
    Overdue and on-point. A common conversation I have with agents is about how to best serve their clients. Fortunately, when it’s put in terms of “what is in your client’s best interests?” My experience has been a referral works best in everyone’s interests.

    This may be the most lucid post I’ve seen on this topic in quite some time – and I agree that perhaps the time for a separate licensure requirement is at hand.

    Navy Chief, Navy Pride

    • Nathan Hughes

      June 3, 2010 at 10:04 am

      Great post and I’m glad to see someone else (Joe) thinking about separate licensing. I’m the 2010 Chair of the Commercial Council for the Virginia Association of Realtors and separate licensing is something we’ve pushed for several years. (Technically, we’ve asked for mandatory certification to be able to practice commercial real estate, but if it’s mandatory for both residential & commercial then it’s a matter of semantics.)

      I don’t see any reason there is argument against educating ourselves to be sure that we, as agents and brokers, are competent to practice in the area of real estate that we want to practice. Our Code of Ethics states that we agree not to practice outside of our area of competence (maybe not the exact wording, but something to that effect).

      Also, brokers have a responsibility to understand the types of transactions that their agents are doing. As a sales manager in a firm that does mostly commercial, and a little residential, I educate myself in both types of transactions — and if there were separate licenses, then I would get licensed in both.

      Great post, Erica! I think that if everyone followed your advice, this wouldn’t even be an issue.

  2. Mark Brian

    June 3, 2010 at 10:16 am

    From Article 11 of the NAR Code of Ethics & Standards of Practice:

    REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth.

    Pretty much says it all IMHO.

  3. BawldGuy

    June 3, 2010 at 11:36 am

    The best deals and the most fun I’ve had locally is dealing with a house agent representing the other side. It doesn’t matter whether the income property is their listing, or they have the buyer — I could write a short book about the crazy lopsided transactions involving house agents tryin’ to hang with income properties.

    It’s surprising to me no local brokerage has been sued by an investor represented by one of those ‘agents’.

  4. Ryan Martin

    June 3, 2010 at 1:23 pm

    In our area we have 2 multiple listing services. One is strictly commercial and the other MLS is for all property types, which includes commercial. Some of the commercial only brokers are only members of the commercial MLS because they don’t want residential or cross agents to learn about their listings. IMO, they are doing a disservice to their seller because a large percentage of commercial real estate is sold by cross agents in our market.

    With that said, I agree completely that some residential agents get in way over their head. The biggest two problems that it causes are additional work and headaches for the commercial broker that has to do all of the work and the added liability of the broker of record that is responsible for these rouge residential agents. Providing real estate services beyond your scope of expertise is an invitation for a lawsuit if anything goes wrong and if you don’t know what you are doing when selling a gas station or strip mall (as you mentioned above) there is a good chance that you will do something wrong.

  5. Erica Ramus

    June 3, 2010 at 8:16 pm

    Thanks for the comments! I think a separate certification program would be nice, but don’t see brokers enforcing it. CCIM is an excellent program. But would brokers turn away listings if they or their agents don’t have the CCIM or proper experience?

    I agree the NAR code of ethics quoted above would preclude most residential agents from taking a large commercial listing — or anything out of their realm of experience. But it doesn’t. Brokers 1-2 hours away regularly list properties in our rural area, don’t put them on the local MLS and don’t want to come here to show their own listings. Isn’t that breaking the COE?

    The mighty dollar leads people to take listings they have no business taking.

  6. Mike Bowler Sr.

    June 3, 2010 at 9:24 pm

    Erica, great discussion. Separate licenses will be the key, however as stated above by Mark Article 11 of the NAR Code of Ethics & Standards of Practice has not been enforced by local associations on this age old problem. Today, right within the residential arena we have the same problem with unqualified agents handling short sales, income properties, bank owned properties, etc. I guess it falls back on education. Smart agents will refer the business and focus at what they do best. Thanks for contributing to the education of REALTORS by sharing your thoughts.

  7. Amy

    June 3, 2010 at 11:07 pm

    In our area we have 2 multiple listing services. One is strictly commercial and the other MLS is for all property types, which includes commercial. Some of the commercial only brokers are only members of the commercial MLS because they don’t want residential or cross agents to learn about their listings. IMO, they are doing a disservice to their seller because a large percentage of commercial real estate is sold by cross agents in our market.

    With that said, I agree completely that some residential agents get in way over their head. The biggest two problems that it causes are additional work and headaches for the commercial broker that has to do all of the work and the added liability of the broker of record that is responsible for these rouge residential agents. Providing real estate services beyond your scope of expertise is an invitation for a lawsuit if anything goes wrong and if you don’t know what you are doing when selling a gas station or strip mall (as you mentioned above) there is a good chance that you will do something wrong.

  8. Marc Knight

    June 4, 2010 at 5:52 am

    Great post; the idea of seperate licences is long overdue. Thanks for elaborating!

  9. Jack Chu, CCIM

    January 2, 2017 at 1:56 am

    As a CCIM, I could agree more with you. I believe we all have our niche and we do specialize in our own area. For example although I have an MBA in real estate and a CCIM, I primarily focus on Apartment because I used to developer apartment of 300-400 units. I was also a property manager for the State of Oregon so I have the property management experiences. I am actually are happy to work with residential agents because I believe I can bring to the partnership with my commercial expertise but the residential agent probably have the relationship with his/her clients which together can bring the trust and expertise for the client. I welcome opportunities to work with residential agents.

    Jack Chu, CCIM

  10. Evan Fisher

    September 24, 2019 at 9:12 am

    Selling a commercial property is completely different than that of residential properties. So, a residential realtor who wants to sell a commercial property should be very careful. Research is essential to understand the risk factors associated with the commercial property business and factors which should be taken into consideration to cope with such kinds of trading. Suitable marketing strategy is essential to improve the productivity of a business.

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