Are you looking to become a successful real estate agent?
If yes, the first thing you should ask yourself is whether you’d like to be in residential or commercial real estate. While commercial may be a higher ticket item, the options in residential are a little better at first glance. Reason being, people are far more likely to purchase or lease a property to live in rather than a space for a business to operate (business is more volatile). There are and will always be more potential earing new clients in residential but that shouldn’t discourage you.
Commercial real estate could also attract potential clients by providing investors with a steady income and higher cash flow home. Additionally, it generates higher profits for real estate agents. As per Glassdoor.com, commercial agents make an average of $90,914 in the United States, and the median salary of real estate professionals is $50,897, which is heavily influenced by realtors who specialize in residential properties. Therefore, if you’re hoping to make more money, it is important to know how to become an experienced commercial real estate agent and the advantages and disadvantages of this business.
The initial step in achieving success in any area is to know the products you sell and the product you’re offering. Commercial real estate (CRE) is a term used to describe buildings that are designed to bring in revenue. This includes places businesses run their business, multi-family hotel structures, etc. They are typically owned by owners renting from every tenant or business operating within the premises.
What Exactly Is A Commercial Real Estate Agent?
As per the Association of Real Estate License Law Officials (ARELLO), there are over three million real estate agents throughout the United States. Real estate agents who specialize in CRE have specialized expertise and are known as commercial real estate agents in contrast to those who are realtors for residential properties that specialize in residential properties. Specializing is important because CRE transactions are more complicated than residential transactions.
Additionally, CRE agents typically can represent sellers and buyers in addition to lessees and lessors. In addition to the commissions they receive, however, their broker may also pay them. The nature of their work can be different due to the various niches within the CRE business. For example, in addition to leasing, purchasing and selling, commercial real estate brokers can include property managers, appraisers, and developers of commercial real estate.
How Do I Become A Commercial Real Estate Agent?
Obtain a Real Estate License
Real estate agents must get a license from the state they plan to operate to represent buyers and sellers and the lessees of property transactions. The license is valid regardless of whether or not you wish to offer residential or commercial property. To get the license, you need to:
Meet the state’s eligibility requirements.
Every state is governed by its specific licensing requirements and regulatory office. The most common requirements include age 18, a background check, and a high school diploma. Determining if your state is part of the reciprocal licensing arrangement with any other state is also important. Getting a license from your state could also permit real estate practice in another state.
Learn prelicensure courses that have been approved by the government.
State-specific requirements differ regarding hours as well as content. For example, New York requires 75 hours of classes, whereas Texas needs 180 hours. These courses focus on topics such as the fundamentals of real estate and law in addition to specific state and national topics. They are offered at a degree similar to that of a first-year college class. They are typically priced between $150-$500, depending on the state of origin and course format (online, live or self-study).
Take the real estate test and pass
The state generally conducts exams with between 75 to 150 multiple-choice questions. Also, study guidebooks or courses are suggested since passing rates range from 50% to 60%, and the exam is a pre-exam. States must publish the test results a week after and issue the license about a week later.
Find a Brokerage firm that has commercial deals
After you’ve been licensed, locating a broker specializing in commercial property is crucial to learn about the industry where you plan to work. If you’re looking to work in commercial real estate, here are your two options:
A Real Estate Brokerage That Works in Both Commercial & Residential Real Estate
A steady stream of earnings is found in residential deals, which can be more easily sourced and quicker to conclude, no matter if your client is leasing, buying or selling. Additionally, you will encounter difficulties finding commercial deals without experience as a rookie agent. Therefore, while you’re waiting, it’s possible to take a lesson from the commercial strategies of others and develop a client list so that you can build your own and strive to become an agent for commercial real estate.
Only a few brokerages can split deals equally between residential and commercial. That means there is less exposure to commercial deals than you might in the commercial brokerage of real properties.
Find a Real Estate Brokerage That Works Exclusively With Commercial Real Estate
A benefit of working with a broker solely focused exclusively on CRE is that they typically have a salaried education program for new associates. They can run for up to a year and allow the trainees to solely focus on CRE and not on residential transactions for a source of earnings while they learn the ropes.
The disadvantage, however, is that brokerages offering training programs can be difficult to join because of much more competition. However, paid trainees are likely to earn between $25,000 to $40,000 annually before making their first commercial trades. Be aware. However, it is true that certain training programs don’t pay salaried.
Alongside the two strategies mentioned earlier, one other way to start your career path in CRE is by working as a student at an agency for commercial transactions before getting licensed or working within its marketing department.
Sign up for a Professional Association and/or Become a MyState Member
Many commercial real estate companies will require agents to be a part of an industry-wide or state-wide professional organization, such as NAAR, ULI or REBNY. It is among the primary tips for success as a commercial agent since they provide ongoing educational opportunities, networking, and discount coupons for supplies and services (such as manuals, software and much more). It is also possible to be a real estate agent by joining the previously mentioned NAR, the biggest organization for the trade of its kind in the U.S., with over 1 million commercial and residential real estate agents. Realtors are real estate agents who agree to NAR’s ethics code, and NAR membership can add to the credibility of your business.
Find A Niche Within CRE
There are many commercial properties available, so it’s important to narrow your focus. Residential agents can sell single-family detached houses, condominiums or even co-ops. Simultaneously commercial agents must specialize. The ability to specialize helps narrow your field and help you gain a better knowledge of your market. It also allows you to identify your ideal customers and build your brand within your expertise. It is possible to specialize in different kinds of property, including commercial, retail, industrial and many more. You can also further specialize in certain applications, such as laboratories such as laboratories.
Put Together A Marketing Strategy
The mentorship program and the professional structure can help you learn about the local real estate market. However, it’s equally crucial to devise an effective marketing plan. The strategy should define the types of properties you’d like to target, how you’ll target your customers with a unique selling feature (USP), an estimated budget, the marketing format and benchmarks to measure success. Additionally, you can expand the above by using the general guidelines of your marketing plan for the best way to get leads.
Seek Out Additional Career Opportunities
As a commercial agent, you could also get involved in a variety of areas other than selling, such as development, buying property and building upon it, organizing financing, discussing leases with tenants and overseeing the whole procedure — or property management with a salary (which involves managing day-to-day activities, like repair, staffing, and staffing).
Things to Think Concerning The Commercial Real Estate Industry
Is it A Match For Your Personality?
The ability to find leads and customers is crucial to succeed. In particular, you should cultivate salesperson skills like being determined, persistent, proactive, driven, and able to persuasively sell a product. Being friendly and not shackled by calling cold and speaking to people who are not your friends is essential. With the advent of technology-driven tools being used in the market, a good understanding of technology is also crucial. since the marketplace constantly evolves, keeping up-to-date with the most recent details and trends is vital.
What Are The Challenges OR Differences Of Commercial Agents
Commercial & Residential Agents
A CRE agent’s role differs from acting as a homeowner agent, which, in turn, has its own set of problems:
Stringent Educational Requirements
While you’re required to obtain an official real estate license issued by the state for both kinds of real estate in the area of expertise, and as a residential real estate agent, there is no requirement to hold a degree from a university. But CRE professionals typically require a college degree, usually in finance or business, since the work involves a deep understanding of intricate concepts like rates of capitalization and internal rate of returns, and many more.
More Training
Although both agents require some knowledge in the area, CRE agents require additional training via mentorship programs with a commercial broker. It is because of the more intricate kinds of properties and transactions that are in CRE.
More Complex Properties Involved
You’ll likely sell bigger properties such as offices or shopping malls in CRE. This means you’ll need to know many other nuances, such as the economic cycle, special tax laws and gross rent multipliers.
Fewer Transactions
Naturally, selling a house is simpler than selling an enormous and, in general, costlier commercial property. Therefore, realtors specializing in residential properties typically have more sales each year but earn lower commissions. As an agent for commercial real estate will earn more commissions for each sale, yet you’ll have fewer transactions in a year.
A Different Client Base
Agents specializing in residential properties have a much easier to find clients due to the greater number of clients and the average homeownership level of 65 percent; there are about 130 million homeowners across the U.S. In essence, homes are considered to be a type of consumption. It’s a location where people can live. On the other hand, commercial property is also sold for investment purposes. Due to the higher cost and the fact that they’re more expensive, it’s sometimes harder to get customers.
Additional Traditional Working Hours
Real estate agents working in residential real estate are available at any time during the week or day, according to when prospective clients can visit the property. But, as an agent in CRE, typically, you’ll work seven days in a row in business times. Additionally, you’ll be working in marketing and networking, which will require a significant period. Additionally, working part-time isn’t necessarily possible for a CRE agent because you’ll be working under the supervision of a brokerage. However, residential agents can work more flexibly.
Different types of tasks
Being a CRE agent, you’re expected to go to different commercial buildings and be aware of all the crucial specifics of the properties you represent, including caps, reports on growth, etc. Being aware of such complicated metrics is not required as a residential real estate agent. Visits typically are limited for properties that the sellers represent, and knowing the area’s real estate market for residential properties will suffice.
If you’re considering becoming an agent, there are many things to consider before deciding to venture into the complicated realm of CRE. Although it can provide high commissions and a variety of specialized areas, it comes with its own issues, including the requirement for higher education, more lengthy closing times, and perhaps smaller deals every year. One of the most crucial steps is looking at all the variables to determine whether CRE is the right choice for you.
