While purchasing either a commercial or residential property will end up with you being a legal property owner, there are some important differences to know about the two processes. Particularly if you hold residential property but not commercial, it is important to know how commercial is different.
Largely, the major difference is the cost. According to bizbrain.org, since commercial deals are more likely to range in the millions of dollars, the process tends to be much more complex and legally rigid in nature.
Why are commercial deals bigger?
It is important to understand that this is not always the case. It is possible to encounter a commercial real estate transaction that is lower in cost and space as compared to a residential transaction. However, this is comparatively rare. For example, the median residential home price between 2013 and 2015 was $260,000 to $300,000. Generally speaking, this purchase only involved one single unit of property.
Again, typically, commercial properties are much more expensive and may involve more than one unit of property.
How does communication differ?
Generally speaking, communication is much more simple in a residential property transaction. This is because the buyer and the seller are generally the individuals who are exchanging property or, potentially, a representative like a real estate agent who is authorized to make decisions.
However, the majority of the time individuals involved with purchasing commercial property use a company name for the purchase. This helps control liability issues. In this case, the representative of this business entity may not be the person who can actually make the final decision. There is much more convoluted conversation and lag time when making commercial property purchases.