September 2, 2022

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.

As described by the OACIQ, the residential license only allows brokers to broker the following buildings:

part or all of a chiefly residential immovable comprising less than five dwellings; or
a vacant residential lot; or
a fraction of a residential immovable that is the subject of an agreement or declaration such as a divided or undivided co-ownership property.

A commercial license authorizes a broker to engage in a brokerage transaction respecting:

a vacant commercial lot;
an enterprise if the enterprise’s property, according to its market value, consists mainly of immovable property;
a commercial immovable, excluding a chiefly residential immovable comprising less than five dwellings, or a vacant residential lot or a fraction of a residential immovable that is the subject of an agreement or declaration such as a divided or undivided co-ownership property.

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 property

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.

Confidentiality Agreement

Different 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

Unlike 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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The information provided in this article is for informational purposes only and does not constitute financial, legal, professional or other advice or opinions. As such, we make no warranties, express or implied, as to the accuracy, reliability, integrity or exhaustiveness of this information, which you use at your own risk. In no event shall Centris be held liable for actions made on the basis of the information contained in this article or for any damage or loss, direct or indirect, that may result from, or in connection with, the use thereof. We recommended consulting with industry professionals for personalized advice before making any decisions.