The Differences Between Residential and Commercial Real Estate Brokers
What is the right type of real estate broker to accompany you in the sale, purchase or rental of a property? Quite an important question! Browse through this article to learn about the main differences between residential and commercial brokerage, and to find a broker who can fully meet your needs.
1. Real Estate Brokerage Sectors of Activity
Real estate brokerage is regulated according to three sectors of activity: residential, commercial and mortgage. Real estate brokers working in the residential and the commercial sectors are subject to the same ethical obligations, which are governed by the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ). Thus, all transactions, whether residential or commercial, are subject to the Real Estate Brokerage Act.
A residential license only allows brokers to broker buildings with five dwellings or less, a fraction of a residential building - such as a divided co-ownership - and a vacant residential lot.
A commercial license authorizes a broker to accompany a future buyer or tenant in a real estate transaction involving commercial buildings, warehouses, offices and land used for industrial and commercial purposes, including buildings with five or more dwellings.
By identifying the type of property you
want to sell, buy or lease, you will be able to find a real estate broker
specialized in that same sector. This is the very first step in identifying a
trusted and professional broker to work with.
2. What Residential and Commercial Brokers Have in Common
The operations performed by a residential and commercial real estate broker are essentially the same and include:
- Market analysis
- Identification of sale, purchase or rental opportunities
- Setting fair prices
- Negotiating in the interests of their clients
- Accompanying the client until the official documents are signed before the notary
- Taking possession of the
3. The Different Aspects of their Operations
Professional practices in residential and commercial real estate brokerage vary according to certain aspects. Let’s see what they are!
Visiting the Building
Visiting a commercial property is not as important as visiting a residential property. In fact, the way in which it is promoted is generally based on business criteria, rather than on a lifestyle. For example, in commercial real estate, a visit is often conditional on the acceptance of a promise to purchase, and not the other way around.
Cancellation of the Promise to Purchase
It is generally easier to cancel a promise to purchase in a commercial transaction than in a residential one because of the “due diligence” period. This allows the buyer to review certain elements such as the financial statement, the condition of the premises, the zoning and the permits obtained and to withdraw if they are not completely satisfied.
financial information may be exchanged in a commercial real estate transaction
and be subject to a confidentiality agreement, which is not usually the case in
a residential transaction.
Forms Recommended by the OACIQ
residential brokers, commercial brokers are not required to use the OACIQ’s
forms; they can fill out their own forms, even if the OACIQ provides them with
recommended forms. However, the regulations stipulate certain information that must absolutely
appear in the brokerage contract or transaction proposal, including the
identification of the parties and the property, the broker’s remuneration
method, as well as the price and the conditions of a sale.
4. Professional Obligations
Before doing business with a real estate
broker, make sure they have the necessary accreditation. To assist you with
your transactions, the broker must hold a license issued by the OACIQ. You can verify this by visiting the OACIQ website.
5. Making the Right Choice
The most important element to consider when choosing a real estate broker is their in-depth knowledge of your sector.
Here are some selection criteria that will help you have peace of mind:
- The experience and skills of the real estate broker
- The quality of their references
- The way they work (alone or as a team) and their availability
- The type of property being considered
- The geographical location of the property
In short, a real estate broker is an ally that you must choose carefully! If you want to have a pleasant and successful transaction, you must enjoy working with them. If you have any questions about real estate brokerage, consult the OACIQ Info Centre.
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