When you’re ready to take the next step towards your business goals, you won’t want to go in alone. More specifically, you’ll want to work with an industry professional who has the knowledge, connections, and experience to get you the best result possible – a commercial real estate agent.
That said, not everyone knows what commercial agents do and why their field of work is distinct from the residential real estate landscape.
This blog is your all-in-one guide to what commercial real estate agents do, how they support entrepreneurs who are buying or selling a business, and what you need to know before you approach the market.
Jump Ahead
- Commercial vs. Residential Real Estate
- Extra-Specialized Insights
- Business Broker vs. Commercial Real Estate Agent
- For Residential Agents: How to Refer to a Commercial Specialist
- Buying a Business With a Commercial Real Estate Agent
- Starting From Scratch
- Selling a Business With a Commercial Real Estate Agent
- Franchises & Commercial Real Estate Agents
- Protecting Yourself (and Your Bottom Line)
Commercial vs. Residential Real Estate
In the world of real estate, the commercial market stands on its own. Everything from the clientele to the properties and transaction process is completely different from the residential side of things.
Before you buy or sell a business, it’s important to understand these differences and how reaching your goals will require specialized commercial real estate expertise. Let’s take a look at a few.
Timelines
In residential real estate, sales move fast – sometimes really fast. In a hot seller’s market, it’s not uncommon for a home to go up for sale and be sold above the asking price by the end of the day. Commercial real estate timelines, on the other hand, take a lot longer. Whether you’re buying or selling, you’re looking at a process that will take weeks if not months to wrap up.
Financing
Securing financing for a business is much more complicated than applying for a residential mortgage. In addition to personal capital and loans, buyers may also work with angel investors and utilize various grants or government incentives to get their business off the ground. These avenues all add extra steps to the buying process.
Who’s Involved
Another major difference between commercial and residential real estate is the professionals involved in your transaction. In a home sale, there are two main parties involved: the buyer (and their agent) and the seller (plus their agent). In a commercial deal, however, there are a lot more people involved.
Beyond just the buyer(s) and seller(s), you’ve got lawyers, accountants, landlords, contractors, subcontractors and other stakeholders playing a key role – plus, there may be even more professionals participating in the purchase or sale of a franchise! Finally, you’ll also be working with a commercial real estate agent.
Extra-Specialized Insights
Commercial real estate gets ever more complicated when you drill down into its diverse micro markets and specializations. Within commercial real estate, many agents, brokers, and teams choose to specialize in specific industries. For example, some professionals work exclusively with accommodation and hotel properties, while others focus on the culinary and restaurant scene. Industrial development and large-scale buildings are another common niche.
About to buy a business? Explore these related blogs for more advice!
- What Permits Are Needed to Open a Restaurant in Ontario?
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- How Much Do You Have to Put Down on a Business Loan?
Business Broker vs. Commercial Real Estate Agent
As an entrepreneur, you may have heard the term “business broker” before – but what does it mean?
A business broker is a type of commercial real estate agent whose expertise and services go beyond just the properties. They focus on the purchase or sale of existing businesses and all the nuances that come with it, which can include buying, leasing, or selling property as part of the transaction.
So, if you’re looking to buy or sell an existing business, you’ll want to hire a commercial real estate agent who is also a business broker.
For Residential Agents: How to Refer to a Commercial Specialist
Rather than attempt to navigate an entirely separate real estate landscape, residential real estate agents should refer clients seeking help with their business goals to a commercial specialist. At the end of the day, the industries are just too different. Plus, most residential Realtors would agree that you shouldn’t hire a business broker to sell your house.
If you try to guide your residential client through a commercial transaction that you’re not equipped for, there will likely be some hiccups or setbacks that come up. This could cause your client to become frustrated and unhappy with your service – potentially leading them to look elsewhere for help.
However, by referring them to the professional who is best able to support their goals (a business broker or commercial agent), you’re showing your client that you have their best interests in mind. When they need help with buying or selling a home in the future, you’ll be the first person they call.
Buying a Business With a Commercial Real Estate Agent
Planning on buying an existing business? There are a lot of reasons why you’ll want to work with a commercial real estate agent – specifically one who has the skill set for this type of transaction (sometimes known as a business broker). Beyond being a major personal and professional project, there’s a lot of work that goes into sourcing, vetting, and eventually closing on a commercial real estate deal.
Sourcing Opportunities
For finding suitable active opportunities aligned with your entrepreneurial goals, a commercial real estate agent is the most valuable resource. Not only can they help you sort through a sea of business listings, but they can also connect you with businesses that may not be listed publicly.
Navigating Due Diligence
When investing in an existing business, you’ll need to do a lot of research and financial analysis before signing on the dotted line. A commercial real estate agent will also guide you through the all-important due diligence process. They’ll know exactly which documents, records, and other important details need to verify before the deal gets done.
Securing the Best Deal For You
When it’s time to negotiate a deal, your commercial real estate agent will leverage their industry-specific knowledge to ensure your interests are protected, helping you get the best price and terms on your investment.
Starting a Business From Scratch
Even if you plan on starting your own business from the ground up (rather than buying one), you’ll still need a professional expert by your side. Not only will you need to source real estate (and a wide range of other things like equipment, supplies, utilities, and staff), but you’ll also need to sort through a ton of red tape.
Once again, a commercial real estate agent’s expertise can be invaluable in this process. In addition to helping you find the right space to bring your vision to life, they can offer guidance on certain aspects of the set up and regulatory processes to help you get your journey started on the right foot.
Want to know more about working with a commercial agent? Explore these related readings from our blog!
- Working With a Business Broker: The Basics
- Why You Should Sell Your Restaurant With a Business Broker
- What’s the Difference Between Residential and Commercial Real Estate Transactions?
Selling Your Business With a Commercial Real Estate Agent
When you’re ready to move on to your next chapter as a business owner, achieving a smooth and profitable sale requires guidance from someone who understands commercial real estate transactions like the back of their hand.
Uncovering Your Business’ True Value
Valuing your business (or any type of commercial property) is, you guessed it – very intricate. A commercial real estate agent can help you estimate an accruate market value for your business. After that, they’ll help you prepare and position your business for maximum returns.
Managing Your Sale
Selling a business is a complex, hands on process with no shortage of moving parts. Rather than manage it yourself, you’ll want to trust a professional. Your agent will make sure that all parties involved (the buyer’s agent, lawyers, accountants, insurance agents and beyond) are connected, communicating, and following the necessary steps all the way through closing.
Connection to Buyers
In the commercial realm, prospective buyers don’t shop for properties in the same way residential house hunters do. With that in mind, one of the best reasons to work with a commercial real estate agent when selling your business is their connection to buyers.
An experienced, well-ranked agent will have close-knit relationships with key players in your local market and can instantly get your business in front of qualified buyers such as small business investors, landlords, or other entrepreneurs.
Negotiation Expertise
Finally, a commercial real estate agent’s professional experience will be crucial to ensuring you get the best deal possible during the negotiation process. They’ll help you gather and organize relevant property information, including financial statements, lease agreements, and property condition reports, to present a compelling case to potential buyers.
Franchises & Commercial Real Estate Agents
Franchises are a standalone business model that offer unique benefits to entrepreneurs.
Just like with independent businesses, buying (or selling) a franchise requires the guidance of a commercial real estate agent – ideally one who understands the nuances of the franchise model and has experience working with top Canadian franchisors.
As a franchise buyer, a commercial real estate agent can identify high-quality franchise opportunities in your area. They’ll also guide you through key aspects of your transaction from acquiring financial and legal support to navigating negotiations and understanding key policies and disclosures.
Working with a franchise-specialized business broker is also important should you wish to sell. Because your business is part of a larger corporate structure, your franchisor may have certain rights should you choose to sell – including the right of first, or the right to refuse. This may sound easy, but it’s not always the best route in terms of ROI.
A business broker can help you decide your best path forward. They won’t just walk you through every step of the selling process, but they’ll also help you get the best possible return once your franchise hits the market.
Searching for tips on selling your business? We’ve got plenty on our blog.
- How to Sell a Business Quickly
- How to Sell a Business in Ontario
- Can I Sell My Restaurant If It’s Not Profitable?
Protecting Yourself (and Your Bottom Line)
In commercial real estate, there’s more on the line than just your personal goals. Whether you’re buying or selling a business, any issues you run into can have consequences.
Let’s say there’s a problem during the closing process and your purchase or sale falls through – it’s not just a matter of stress, you’re also looking at a ton of lost time and money. In more severe or serious circumstances, you could even face a potential lawsuit.
Once again, the best way to protect yourself as an entrepreneur is to work with an expert.
Carve Real Estate: Toronto’s Commercial & Restaurant Real Estate Experts
Searching for a commercial real estate team that can assist you in exceeding your entrepreneurial or business goals? Get in touch with us – Carve Real Estate.
As leading commercial real estate professionals in Ontario, we’re tuned into the country’s most exciting, high-potential markets. Boasting expertise with a wide range of industry and property types, we provide educational, end-to-end guidance to ensure you have the upper hand. Whatever your commercial real estate needs may look like, we can help.
Ready to bring your goals to life? Carve Real Estate can help! Reach us at ryan@carverealestate.com or call 416-618-0054.
