Commercial vs the Residential Buyer – Why do they buy?

The commercial buyer and the residential buyer buy property with a totally different mind set. For many years, before expanding my business into commercial real estate, I was a residential agent. It was always a mystery to me why people would tell you one set of wants and end up buying something very different. In many cases the buyers would buy from curb appeal. The home didn’t need all of the features that were mentioned they just liked the way it looked. I am a slow learner and it took me a number years to discover that people wanting to buy a home are generally very emotional about it. They want and ask for the moon but I believe that most of the time they want something they can be proud to own – It all starts with the outside – curb appeal.

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The commercial buyer on the other hand just looks at the numbers. If they are buying an investment property they want to start by looking at the income and overall expenses. What is the potential return and how soon can I receive it. If the property needs upgrading how much will it cost and how soon. The land investor is not looking for cash flow but for appreciation. He/she is gambling on the value increasing over time. This type of investor is looking for a more passive investment – no rent collecting. While a developer is a land buyer he/she generally want to look at adding value and making their profit through the new product. This is all about numbers – very little curb appeal involved. Which buyer is the easiest to work with? Once you figure out that you may be getting only part of the story they can both be a challenge and a lot of fun.

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