Commercial Real Estate Basics for Residential Agents

Many of BC's most lucrative transactions — gas stations, restaurants, hotels, warehouses, retail plazas, and small businesses — sit outside the residential MLS® world most agents know. Moving into commercial and business brokerage is one of the highest-leverage steps a residential realtor can take, but the documents and the diligence are different. This guide covers the basics.

1. The Confidentiality Agreement (NDA) comes first

Unlike residential listings, commercial and business listings almost always require a buyer to sign a Confidentiality Agreement / Non-Disclosure Agreement before receiving financial details. The NDA protects the seller's trade secrets, customer lists, and lease terms. As the representing agent, you must ensure your buyer signs before any financials are shared — sharing financials without an NDA in place is a fast way to lose the deal and the seller's trust.

2. Business vs. asset vs. share sale

A business sale is not one thing. An asset sale transfers specific assets of the business (equipment, inventory, lease assignment, goodwill). A share sale transfers the corporation itself, including its liabilities. Each has very different tax, liability, and due-diligence implications for the buyer. Most small-business sales in BC are asset sales, but you must understand which structure you are transacting and flag the difference to your buyer and their lawyer.

3. Valuing a small business

Business valuation is not comparable to residential comparable sales. The common methods include a multiple of Seller's Discretionary Earnings (SDE) for small owner-operated businesses, EBITDA multiples for larger operations, and asset-based valuations. Buyers (and their lenders) will want to see tax returns, financial statements, and point-of-sale reports — and they will compare the reported revenue to bank deposits. A large gap between reported and deposited revenue is a red flag you must raise with your buyer.

4. Lease assignment and landlord consent

For a business operating in leased premises, the lease is often the most valuable asset. Most commercial leases require landlord consent to assign the lease to a new tenant, and the landlord can withhold consent for reasonable grounds. A deal that ignores the lease-assignment condition can collapse at the last minute. Always make the transaction subject to landlord consent where applicable.

5. Due diligence that protects the buyer

Commercial due diligence goes far beyond a property inspection. A typical checklist includes:

• Review of financial statements and tax returns (typically 3 years).
• Verification of revenue against bank deposits and POS reports.
• Review of all leases, supplier contracts, and employee agreements.
• Liquor license transfer eligibility (for licensed premises).
• Environmental assessment where the property use warrants it (gas stations, dry cleaners, industrial).
• Equipment list and condition, including any financed equipment that must be assumed or paid out.

6. Where residential agents get into trouble

The most common mistakes residential agents make on commercial files: treating the transaction like a residential purchase (no NDA, no financial review), failing to make the offer subject to lease assignment, and not recommending the buyer engage a commercial lawyer and accountant early. Commercial buyers expect you to understand the structure of the deal — if you do not, refer or partner with a commercial specialist rather than winging it.

7. Rexara's commercial mentorship

Rexara Realty Inc. handles commercial and business transactions across the Fraser Valley — gas stations, restaurants, hotels, warehouses, retail, and offices. Gurjit Ghai PREC personally reviews commercial files and mentors residential agents transitioning into commercial. If you want to build a commercial specialty without leaving your residential business behind, that mentorship is the fastest path.