In both Tennessee and Georgia, there is no license specific to residential or commercial real estate. Regardless of the transaction type, we must adhere to the rules and laws in that regard. As realtors, we have a license to practice either residential or commercial, but should we? It depends.
Article 11 of the Realtor Code of Ethics identifies nine real estate disciplines – residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate. Further, Article 11 requires, “Realtors shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client.”
Compare the variety of real estate disciplines to the medical field, which comprises dentistry, psychology, surgery, and anesthesiology, to name a few. Sure, all doctors study gross anatomy in pre-med, but even they don’t go to a dentist when their toe hurts or seek out a cardiologist when they have a skin rash. Would you?
I raise these questions in response to what we’ve seen over the past year with COVID, which has undoubtedly affected the commercial real estate market. Nationally, more commercial properties are available due to many businesses closing and others pivoting to a hybrid workplace. The growing commercial inventory and record low residential inventory has led some of my fellow residential practitioners to turn an eye towards commercial real estate. Thus, it’s for realtors to realize when partnering with another realtor might be best – for the client, the transaction, and you.
While there are certainly many similarities between residential and commercial real estate, the differences between the two disciplines are significant. While residential transactions involve termite inspections, property condition disclosures, HOAs, and property lines, commercial transactions might include zoning and infrastructure regulations, cash-flow considerations and lease analysis. When crossing between commercial and residential real estate, at times, it makes sense for a realtor to partner with a fellow realtor to ensure all nuances to the transaction and clients’ best interests are considered.
I’m not suggesting our members who have covered both residential and commercial transactions successfully for years should not do so. They’re considered competent because they well-versed and trained in each discipline. Regardless of the transaction type, it’s important to keep the client’s best interests in mind. Realtors collaborate with experts, including fellow realtors, to make sure that we’re best serving our clients and their real estate needs, whether they’re buying a house, or investing in commercial property. That’s Who We R.