If you’re considering buying, selling, or leasing commercial property, you may be wondering if you need to find an agent with a special commercial real estate license. 

In Montana, there is no specific credential required to buy, sell, or lease commercial real estate besides a basic real estate license – the same license that residential realtors hold.

It is important to partner with experienced commercial agents to ensure you don’t miss critical inspections expanding beyond that of a residential property, to plan for accurate due diligence deadlines given lending and appraisal requirements differ on commercial transactions, and to capitalize on the appropriate value of the asset in pursuit/disposition. 

Beyond finding a real estate agent who only specializes in commercial transactions, you can also look for an agent with the following designations: a CCIM or a SIOR. CCIM and SIOR designations indicate that the agent has completed specialized education, passed rigorous exams, and met certain experience criteria by documenting large volumes of commercial transactions.

However, we understand that once you establish a great working relationship with a real estate agent, you tend to stick with them for future transactions. It makes sense to work with someone you trust when it comes to some of the biggest purchases you’ll make as a homebuyer.

A good residential agent will likely advise you to seek a commercial broker for your commercial transactions because while they are both real property, residential and commercial deals are extremely different. Afterall, Article 11 of the National Association of Realtors Code of Ethics states:

 “The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate. 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.”

It’s important to feel confident that your trusted real estate resource is competent to advise across all asset classes you are involved in.

Here are a few ways the  deals differ:

More Factors to Consider

Commercial properties have unique considerations, such as zoning regulations, lease agreements, income potential, and market analysis. A residential broker may not have the background to advise on the various moving parts of a commercial deal, which can result in loss of time, effort and capital. If you’re buying an investment property, are the leases at market rate? Are they net, modified gross or full service leases? If a tenant vacates can you re-lease the property at the same rate…..or is market less or more than the current base rate?

More Complex to Value

Valuing a commercial property takes a different skill set than valuing a residential property. Determining the value of income-producing properties involves analyzing factors like net operating income (NOI), cap rates, and cash flow projections. Without a commercial expert who works with this level of underwriting consistently, you may be leaving money on the table if you are selling – or dramatically overpaying if you’re a buyer.

Negotiation is Different

Negotiation in commercial transactions include lease agreements, purchase terms, and financing options. Commercial agents are well-versed in negotiating these intricate deals, protecting client interests, and maximizing profitability. Residential sales require a different approach that offers few transferable skills.

Additional Regulatory & Legal Factors

In a commercial transaction, there are additional legal and regulatory requirements above and beyond what is typical in a residential deal. Environmental regulations, lease laws, parking considerations, zoning, form based code…there are a number of ways your business could struggle if a commercial deal isn’t done right.

Working with experienced commercial agents maximizes your chances for a successful transaction of non-residential property. Commercial agents bring specialized education, expertise, market knowledge, and negotiation skills to the table.

Skilled residential real estate agents know their limitations and wouldn’t risk their client relationships by offering to broker a commercial deal – and neither should good commercial agents take on residential sales. In either case, what’s best for the client should prevail rather than having an unqualified agent fight through unfamiliar territory just to earn a commission., we