If this is your first time purchasing commercial real estate, it is important to understand how and why it is different from a residential real estate purchase. While some elements of the process are similar, there are a few major differences that you should be aware of.
There are two major differences between purchasing commercial real estate residential real estate. According to Biz Brain, these two differences are that commercial deals typically involve more money and residential real estate purchases are comparatively more simple.
What is the cost difference?
According to the National Association of Realtors, the median price for a residential property was between $260,000 and $300,000 between 2013 and 2015. While this is a considerable amount of money, commercial deals are generally considerably more than this. This is because a residential real estate purchase is usually a single unit of property.
On the other hand, commercial real estate may be multiple units. Plus, zoning may drive up the value of the land associated with the commercial real estate purchase, particularly if it is in an area designed for retail or office spaces.
How are commercial purchases simpler?
The majority of residential real estate purchases follow a similar pattern. You may enter a brief period of bargaining with the seller if you are the buyer, but once this finishes, the buyer will make an offer, which the seller accepts, and then the buyer puts the money into escrow. There will be a series of reports, including a home inspection, and appraisal of the property. Usually, this takes between 4 to 8 weeks.
On the other hand, a commercial real estate purchase may take weeks if not months to finish.
