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The Importance Of Commercial Real Estate Professionals
ommercial real estate is a
highly profitable industry If you look at the residential
where many people dedicate investor, however, he or she
their lives. Like the many usually does not have a huge team
divisions of a Fortune 500 surrounding him or her and can
company, the commercial real usually invest in a few homes at
estate industry has many a time with ease.
opportunities for those with
professional educations and Why is it that the residential
interests. Some professional investor does not need a full
interests may include legal time team to look watch over and
counsel, accounting, finance, consult every deal prior to
development, building and purchase? Beyond the obvious
investing. When it comes to the reason that residential real
commercial real estate industry, estate does not involve nearly
these professionals are highly the millions, tens of millions,
specialized in their knowledge hundreds of millions and even
and perform amazingly well within billions of dollar price tags and
their boundaries. profits that commercial real
estate is known for, there is
These highly specialized another very important attribute
professionals are often grouped of commercial real estate that
together in teams by commercial separates it from residential
real estate investors. A savvy real estate.
investor surrounds him or herself
with competent professionals to This attribute is characterized
make sure that every deal that is by a term known as “buyer
made yields the highest most beware.”
profitable results, with little
to no problematic factors. We all know that with most
residential real estate, the
buyer must be disclosed of every The opposite is true in the
aspect of the property- good or commercial real estate industry.
bad. For example, if the roof was The owner or agent does not need
leaking in a home, but it was to disclose any information about
summer so the purchaser may not the property to the purchaser. In
necessarily find out until rainy fact, if the new owner discovers
season, then the owner or agent that the land he or she purchased
must disclose this fact to the is toxic, and the previous owner
purchaser. It is illegal for the or agent said nothing, it is the
owner or agent to withhold any new owner’s responsibility to
information from the purchaser. have the land cleaned. The new
This law greatly decreases the owner must pay all legal and
risk on the purchaser’s behalf cleaning bills that come along
and if a problem arises that was with toxic property.
not fully disclosed at the time
of purchase, then the purchaser This may seem rather unfair. Why
could receive his or her deposit should the residential real
back and the owner and agent estate industry have full
could suffer penalties. disclosures while the commercial
real estate industry does not? In
In residential real estate, the commercial real estate, you have
buyer does not need to beware (in a certain amount of time prior to
this sense) because every detail purchase to perform due
must be disclosed so he or she diligence, or a complete analysis
has the absolute facts on a of the property. This may include
property before deciding to part building inspections, soil tests,
with a down payment or take out a infrastructure analysis,
mortgage to purchase the financial analysis etc. The buyer
property. is completely responsible for
retrieving the facts on a
property. Let’s look at an example.
Purchaser A wants to purchase a
It is considered an open and free property from Seller B. The
market so, “buyer beware.” There property is raw land and is
is a lack of need to protect the currently zoned R-1, or
buyer or seller by the law. residential lots one lot per
Therefore, it is increasingly acre. According to the agent,
important to have commercial real there is a good possibility that
estate professionals looking out the city needs additional
for the commercial real estate commercial land to balance out
investor at every turn. the additional homes and
apartments that were recently
Because the law does not protect built near the subject property.
the buyer, the buyer must protect For this reason, the city may be
his or herself. Legal counsel interested in rezoning the land
should be brought in to oversee from R-1 to commercial.
every single deal. This includes
conditional statements on a Purchaser A can see the profit
contract and performing the most potential of this rezone and
in-depth due diligence one can wants to purchase the property.
possibly do. Commercial real Purchaser A lets the owner know
estate is not something you can that he wants to purchase the
look at for a few weeks and then currently zoned R-1 property.
decide you want to purchase like Purchaser A is acting in good
a home. It can take 45, 60, 90 faith that the property will be
days and more to perform due rezoned to commercial. But just
diligence, depending on the in case, Purchaser A includes a
purpose of the property and how conditional clause that states
complicated the property is. that if the property cannot be
rezoned to commercial, then the can give you is never take what
contract is null and void. you hear for face value. Verify
Purchaser A will no longer have a every fact and have your
liability toward the property and commercial real estate
owner. professionals available at every
turn. The information they can
This was an intelligent move conjure can save you a lot of
Purchaser A made because in this money and legal headaches by
case, the property could not be simply getting the facts verified
rezoned to commercial. Instead of and inserting conditional clauses
sitting there with a much less in the contract.
valuable R-1 zoned property,
Purchaser A was left with no If you are new to the commercial
property at all, but no financial real estate industry, realize the
or legal problems either. And rules are a little different and
that is far better than a a lot more is at risk than in the
worthless property and a legal residential real estate industry.
battle to contend with. Keep the “buyer beware” mentality
alive at all times and allow
Every commercial real estate deal professionals to do their jobs.
is extremely different. Buyer and That is what they are there for.
seller personalities, the quality Surround yourself with the best
of due diligence, the integrity and you will quickly become the
of the buyer and purchaser, the best.
financial needs, and skills of
professionals such as the escrow Now that you have had a chance to
company and commercial real look at “buyer beware” and how it
estate owners all play a huge plays a specific role in both the
role in how each deal results. commercial and residential real
The best and most sound advice I estate industries, you can
greatly appreciate the additional in your best interest. Without
risk in doing commercial real them, there would be far more
estate deals as well as the problematic deals- and that is
importance of solid commercial exactly what you want to avoid.
real estate professionals working
About the Author:
Tony Seruga, Yolanda Seruga and Yolanda Bishop of http://www.maverickrei.com specialize in commercial and investment real estate. As of May, 2006, they and their partners are managing over $600 million dollars worth of new projects.
Read more articles by: Tony Seruga, Yolanda Seruga And Yolanda Bishop
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