According to the most recent study on real estate agent income by Colibri Real Estate, the average salary of a commercial real estate agent in the U.S. is $193,644. Compare this with the average residential real estate agent’s salary of $80,769. This is one reason real estate agents prefer to specialize in the commercial niche.
Maybe a higher income isn’t a driving factor for you, and you simply prefer commercial real estate to listing single-family homes or showing condos. In any case, the licensing requirements of a residential and commercial real estate agent are the same. Here’s what you need to know about launching a career in commercial real estate.
How to Become a Commercial Real Estate Agent
If you are just getting started in real estate and are interested in the commercial real estate niche, it’s helpful to know that the licensing process is the same- regardless of niche. Here’s a brief overview of the residential and commercial real estate licensing process. However, keep in mind that each state has its own specific regulations.
1. Complete your state’s real estate pre-licensing course.
Becoming a commercial real estate agent starts with a good education. During your pre-licensing courses, you’ll learn about state and national laws regarding real estate transactions, rules, and best practices for being a real estate agent.
Everyone becoming a real estate agent in your state takes the same courses, as they cover both residential and commercial transactions. This is good news for those unsure about specializations.
When selecting a real estate licensing school, look for one with a good reputation in the industry, top-notch exam prep materials, and instructor assistance.
2. Complete a real estate licensing application.
At some point, you will be required to complete an application for your real estate license. You’ll need to provide supporting documents that show you meet the minimum qualifications to become a real estate salesperson in your state. The application will also include questions about your licensing and legal background, which you must answer as truthfully as possible.
You’ll also pay a fee when you submit your application. Some states will also collect background check and/or exam fees at the same time.
3. Pass your real estate licensing exam.
Most real estate agents report having to study to pass their state’s real estate licensing exam. Consider creating a study schedule to ensure you get through all the materials before your test date.
A third-party testing company typically proctors real estate licensing tests. You’ll need to show two forms of ID to take the test, whether you complete it at a testing center or are proctored online at home.
Most states require a 70-75% on the test to pass. You should find out immediately if you passed the exam.
4. Pass a background check.
Real estate agents in every state must pass a background check. Most states require want-to-be-agents to submit fingerprints for their background check. You will likely have to pay an additional fee for this part of the licensing process.
5. Find a brokerage.
Only real estate brokers (or managing brokers in some states) can complete real estate transactions independently. All other real estate agents must have a broker (or managing broker) oversee their work.
Before you can work as a commercial real estate agent, you must become affiliated with a real estate brokerage.
If you are interested in commercial real estate, consider searching for a brokerage in your area that offers specialized training or commercial real estate mentors.
Skills You Need to Work in Commercial Real Estate
Becoming licensed is the first step to succeeding in commercial real estate. In addition, here are some key skills you’ll need, some of which you can learn from pre-licensing, continuing education, and real estate coaching and training.
1. Market knowledge:
Whether you work in residential or commercial real estate, you need to have deep knowledge of the local real estate market, including property values and economic factors in your community that influence commercial real estate prices.
2. Negotiation skills:
Agents need strong negotiation skills to secure favorable terms for clients. Don’t worry – you can develop those skills while working with a highly skilled mentor.
3. Networking:
You need to network to become a commercial real estate agent. Get to know other agents, potential clients, investors, and industry professionals in your targeted area.
4. Marketing:
When interviewing brokerages, ask about the marketing resources they offer to beginning commercial real estate agents. It may take time before you earn enough for a marketing budget, so leverage your brokerage’s resources until you can develop your own strategies.
5. Customer service:
Communication skills, attention to detail, scheduling, and problem-solving all lie under the customer service umbrella. The best way to grow your commercial real estate business is to have happy clients. Take care of them, and your business will expand.
Pros and Cons of Commercial Real Estate
You may still be deciding whether commercial real estate is the niche for you. Here are some benefits and drawbacks of the industry to help guide your decision.
Benefits of being a commercial real estate agent
High earning potential: The average salary of a commercial real estate agent is higher than a residential real estate agent. You can earn substantial commissions from large transactions.
Variety of work: Unless you specialize in a specific type of commercial property, each transaction you work on will involve different types of properties and clients, which keeps the work interesting.
Career growth: There are always opportunities for advancement in commercial real estate, whether through more significant deals, specialization, or opening your own brokerage. You can also diversify your work by offering commercial property management.
Work schedule: Unlike residential real estate agents, commercial real estate agents often conduct business during traditional work hours – leaving evenings and weekends free.
Drawbacks of being a commercial real estate agent
Unpredictable income: You only get paid when you close a deal in real estate. Some deals may take months and may fall apart at the last minute.
Competitive market: Some commercial real estate markets are highly competitive. Real estate agents must always be cognizant of their sales funnel to ensure they have more work on the horizon when one deal closes.
Market dependence: Income and job stability can be heavily influenced by conditions outside your control.
Is commercial real estate the right career path for you? The good news is you don’t have to decide now. Earn your real estate license and then decide if commercial real estate is the best choice for your situation.
McKissock Learning and Colibri Real Estate work hand-in-hand to offer pre-licensing, continuing education, and real estate professional development.
McKissock now offers audio real estate courses. With the narrating audio option, the text in your course material is highlighted as it is spoken. Gain an understanding of the material at your own pace while controlling the speed with multiple speed options.
Key Takeaways
- Commercial real estate agents must earn the same license as residential agents.
- The real estate licensing process is state-specific, although each state requires pre-licensing courses, a background check, an exam, and an application.
- Commercial real estate agents need local market knowledge and negotiation skills to succeed.
- While commercial real estate agents have a high earning potential and a more traditional work schedule, they also have an unpredictable income that may depend on the market.
