Buying or selling any type of real estate – either commercial or residential – is full of many challenges, twists, and turns. For this reason, you do your best to align yourself with professionals who can provide assistance throughout the process.
It’s important to understand what to expect along the way, such as the difference between commercial and residential escrow services. With the right knowledge, it’s easier to make decisions that work in your favor.
Here are some things you need to know about commercial and residential escrow services:
- More people involved: With a residential transaction, there are usually no more than two buyers and two sellers. However, with a commercial transaction, there are likely to be additional parties.
- Commercial closings take longer: Generally speaking, it takes longer to close a commercial property, as there are more legal stipulations to consider. Also, since there are typically more funds associated with a commercial closing, it can result in a longer closing cycle.
- Higher risk: No one wants to run into trouble when buying or selling real estate, but the risks are much higher when it comes to commercial transactions. There are many reasons for this, including the fact that the transaction amount is typically higher and the deals often occur between legal entities.
- Different requirements: The requirements for a commercial escrow service are different than those for a residential transaction. For example, all residential transactions are governed by the Real Estate Settlement Procedures Act (RESPA). This doesn’t come into play with commercial transactions.
Overall, commercial real estate deals are usually more complicated than those associated with a single family home changing hands. Understanding the difference between commercial and residential escrow services will go a long way in helping you make informed decisions every step of the way.