Real estate is a highly regulated field, and that regulation begins with who is permitted to sell property within each state, and what categories of property they are authorised to sell.
EAC partner, The Australian College of Professionals, joined us to answer the frequently asked question, ‘which licence is required to sell commercial real estate?’
Facilitating the sale of real estate for another person or group comes hand-in-hand with a list of rules a mile long. Various clauses within state legislation dictate how you must list a property, the paperwork required, the processes that should be adhered to and what licence you need in order to get started.
Licensing in real estate can be a little bit confusing because different licences can be required for the sale of different types of property. For example, a registered agent may not be legally qualified to sell land over a certain size, where a stock and station agent can.
With this in mind, it can be easy to assume your standard certificate of registration or licence precludes you from listing commercial property.
“The question of whether or not an agent requires a different licence to sell commercial property is a very popular question,” says George Evangelidis from ACOP. “Interestingly, most people believe they do need a separate licence, when in fact, they don’t!”
“If you’re a certificate of registration holder in real estate, or you are licensed to sell real estate, you can sell non-residential property, that is, commercial, industrial and retail property.”
What’s the difference between residential and commercial real estate?
Part of the reason some agents don’t venture into commercial sales is the perceived complexity of the processes and legislation; selling a shopping centre or a large industrial building can be intimidating, especially at the start.
But as George explains, commercial doesn’t necessarily differ in its level of complexity as compared to residential sales. Where it does often differ, is in the needs and experience of the client.
“The reality is, the type of person you’re dealing with in non-residential is usually a lot more knowledgeable as they’ve sold property over a number of years; they’ve been around the block a few times!”
“You do need to be a bit more knowledgeable in commercial sales so you can discuss matters with a client of this nature. They may have built up a multi-million-dollar portfolio, so they may also not be quite as patient as a residential client; they might expect you to know more,” he continues.
If you’re just starting out in real estate, or even if you have been selling residential for many years, a client who expects so much from you from day one, may seem daunting. Don’t let the nature of the client put you off; facilitating commercial sales can offer a new revenue stream to your business and can also be very personally and professionally rewarding.
“The sophistication of the owner is a big difference between residential and commercial,” George says. “You may be scrutinised more thoroughly. Just have your answers to questions always ready. If you don’t know any answer, let them know you’ll do some homework and get back to them.”
“Don’t be daunted by the client or by commercial, start building up your portfolio with people who may have smaller properties first, then gradually work into shopping centres or industrial units.”
Why is a commercial real estate right for you?
If you are thinking about diversifying your skill set or your service, branching out into commercial sales may be an option that can provide you new benefits and strengthen your brand and business.
Commercial sales can also offer a range of opportunities, especially for repeat or longer-term business for your agency.
“Getting the listing is still the most important thing,” George explains. “But instead of listing a residential property, we’re talking perhaps an industrial complex or an arcade of shops. We’re talking about something that may be worth two or three million dollars each time you go there, so you need to be prepared. Like anything though, if the listing is well-priced, you’ve got a sale!”
“A real benefit is in ongoing business. Much of the time, if you have done the correct job for the owner, you can also end up the manager for the complex. You or your agency may end up managing 17 to 20 shops or 15 industrial units, as examples. You work that out with how many properties you might be involved with residentially, and, in my point of view, commercial real estate is much easier!”
Does the law in commercial change often?
Over the last few years we have seen some quite significant changes made to the legislation that governs residential sales, not just in NSW, but in states and territories right around Australia.
It may seem the law in residential changes quite frequently, but in fact, the law is evolving regularly across real estate more broadly, as external forces like the economy, policy, consumer protections and technology have an increasing influence on all industries, including real estate.
“Like residential real estate laws, commercial laws evolve too,” George notes. “Most recently, the Retail Leases Act has been subject to quite significant amendment.”
“One of the most important changes has been in relation to the outgoings listed in the disclosure statement, which, if written incorrectly, will override what is written in the lease. Inaccuracy here can enable a Lessee to seek compensation or pull out of the arrangement completely.”
“In addition, in the past, there was a minimum term for leases of five years, but under these recent changes, there is now no minimum term.”
While a lot of agents may overlook the opportunities offered by commercial real estate, whether due to passion lying elsewhere, intimidation or other reasons, if you hold a certificate of registration or a licence, you can sell or manage commercial, retail and industrial real estate.
George Evangelidis of ACOP conducts a skills course for commercial, retail and industrial property, focusing closely on documentation and processes.
If you are looking to expand your skillset, revenue streams or just take on a new challenge, this course might be your first step in an exciting new career opportunity.