Commercial Estate Agent V Residential Estate Agent
So you have a commercial property that you would like to sell or rent out and you don’t know who to turn to. Maybe you grab the local newspaper or look on Rightmove to see who is advertising properties local to you and you start calling round.
Then you speak to an estate agent. However, they deal with residential houses, but they have access to Rightmove and/or Zoopla and they have started to sell commercial property now. They use the same pricing model as they do for residential property, so for example letting your commercial property may cost you less than a commercial agents minimum fee, which is about 10% of the first years rent to let a property plus disbursements and around 1-2% to sell, so you decide to use them!
The real difference between a commercial estate agent and a residential estate agent is their level of training and expertise. 90% of all property is residential and it falls into a very narrow range of types – house or flat; garden or not; so many bedrooms and living rooms and that’s it. It’s so simplistic that there are websites (Zoopla, Mouseprice etc) who can work out what a house or flat is worth just based on location and this meagre detail.
Commercial property is much more complex. The dynamics of retailing are completely different from industrial development land which in turn is completely different from hotels and guest houses. The only way a commercial estate agent can understand these is through training and experience. Consider these points:
Deposits and regulation
We are dealing with a client now that used The Property Shop in Gravesend. They let out a shop, took the deposit from the tenant and did not then pass on the deposit to the landlord. The Property Shop is now in liquidation and the deposit has “gone missing”. Our client has lost his money leaving him out of pocket as he will still have to return the deposit to the tenant at the end of the lease assuming all is well.
We are RICS regulated and adhere to very strict rules on handling client money. In the unlikely event that something went wrong, your money would be protected by the RICS and not simply lost as in the example below.
My colleagues and I have seen leases in the past few months which do not adequately deal with all the risks and responsibilities of letting property. The lease is not based on a standard RICS or Law Society template and neither does it appear a solicitor has been involved. There are ambiguities in the leases we have seen which mean that the landlord has been unable to properly enforce terms.
If the lease is invalid and this may seriously affect the value of the property and the price that may be achieved upon a sale.
Commercial agents are likely to have been trained in measuring commercial property. Certainly as RICS members they will be obligated by RICS rules to measure in accordance with the latest measuring practice rules, the International Professional Measurement Standard, to ensure the highest of standards in the industry. Did you know there are different bases of measurement dependant on the type of property? For example, an industrial unit will be measured differently from a shop which in turn will be measured differently from an office block.
Training, knowledge and expertise
This is the game changer. A majority of commercial agents are professionally qualified, with a degree in a property-related subject and/or be members of the RICS ensuring that they have the most up to date information about their property sector at their fingertips. They regularly undertake continuing professional development to keep up to date with the commercial sector. Residential estate agents who dabble in commercial property generally don’t.
Contacts & advertising
You want a combination of skills from an agent selling or letting your commercial property: professionalism, an active contact network and the ability to promote the features of your property to its best advantage. Consider if your estate agent is a specialist in understanding the commercial market and whether they have sufficient comparable evidence to give you a proper idea on the best price for rental or sale. It is essential that agents build up a database of clients looking for property. As well as other advertising methods agents will send your property details out directly to people that have enquired about similar sized and located properties. Is the person looking for property more likely to call a commercial agent or an estate agent? This could affect the length of time your property is marketed for and therefore rent or sale money that you could be missing out on!
You can be helped by specialist commercial property advertising or websites, focussing on key details that a person with a residential property background may not identify. There is nothing wrong with Rightmove, but did you know that a commercial agent’s advert will appear above an advert which has been placed by a residential user!