What Residential Agents Should Know About CRE Deals (Pt. 2)



In part 2 of our 4 part series, Troy discusses the 4 main types of asset classes involved in commercial real estate transactions and the importance of understanding each class in the current market.

Last week we discussed the first thing you should know about when making the switch from residential real estate to commercial real estate, understanding your client’s goals.

Understanding your client’s goals is essential when it comes to commercial real estate transactions. Their goals differ quite a bit compared to the goals of a residential client, who’s goals relate to finding a property that they can call home, a much more emotional experience and transaction.

Today we’ll discuss the second thing any residential agent needs to know about being a commercial broker, understanding assest classes.

# 2. Understand Asset Classes

Unlike residential real estate, commercial real estate has 4 main asset classes or property types; multi-family, industrial, office, and retail. Understanding each asset class is essential to working in commercial real estate. Understanding what they are and their supply and demand in the current market will give you as a new commercial broker a better understanding of the field and what to expect on the job. This doesn’t just mean you do a quick scan of the current market, but that you constantly keep yourself up to date with all 4 of these assets and how they stand in the market.

The supply and demand of each class will vary depending on where you decide to work in, for instance a bigger metro area might allow you to specialize in one or two of these asset classes. Whereas living and working in a smaller market may require you to specialize in all classes and being a “generalist” for your CRE market.

Working in each asset requires that you play a different role. Each role requiring that you approach each client and their goals differently than you would the other asset classes. Make sure that you dedicate the time to understand each asset and the sub-asset classes within the main 4 (hospitality, motels, hotels, gas stations, etc.).  And how each differs in terms of the current market and your client’s overall goals.


Join us in the following weeks for more on the What Residential Agents Should Know About CRE Deals. Next week we’ll talk about the importance of knowing the numbers and why it’s important for new commercial brokers to understand the numbers involved before selling a property.